FARview #21 with Olof Bik (podcast in Dutch)
24 May 2022
In this FARview podcast, Olof Bik (Professor of Behavioral Auditing at Nyenrode Business University) discusses root cause analysis, which has been a hot topic in auditing for the past 10 years. Among other things, he discusses the practice note he wrote on root cause analysis (Ten considerations for conducting Root Cause Analysis in auditing).
The basis for the practice note (and for a report on root cause analysis by the NBA Steering Committee on Public Interests) was laid in a so-called FAR Joint Working Group, in which ten accountancy firms shared their knowledge of root cause analysis in a 'safe haven'.
Bik discusses the origin and the usefulness of root cause analysis for the accountancy practice, including many practical examples. Here are some take-aways from the podcast:
- It's a good thing that the accountancy profession has embraced root cause analysis to find out what doesn't (and does) go well. And especially why that happens.
- Root cause analysis is primarily a learning tool.
- Root cause analysis is certainly also suitable for small accountancy firms.
- A root cause analysis does not always have to lead to an intervention.
- Even with root cause analysis, you can never be sure if you've got the real causal connection.
- The root cause analysis team must be able to operate independently of the people who determine the final interventions. The consequences of the interventions must not influence the analysis.
- Things often go wrong because of the drivers.
- Root cause analysis can also be used for the analysis of events that went right.
The Report on Root Cause Analysis for PIE audit firms of the Public Interest Steering Committee (in Dutch) can be found here.