Concerned auditors are missing the big picture when assessing the effectiveness of a company’s internal control over financial reporting (ICFR), the chief accountant at the Securities and Exchange Commission (SEC) called on the profession—and company managers—to take a holistic approach to assessing risks.
Paul Munter, in a statement published Friday, said the SEC is “troubled by instances in which management and auditors appear too narrowly focused on information and risks that directly impact financial reporting while disregarding broader, entity-level issues that may also impact financial reporting and internal controls.” He urged company managers to “take a holistic approach when assessing information about the business and avoid the potential bias toward evaluating problems as isolated incidents, in order to timely identify risks, including entity-level risks.”
