Across all industries and in all countries, organisations are coming under increased pressure from their regulators, trade bodies and clients to conduct more thorough and effective investigations into incidents.  Root Cause Analysis (RCA) from Sologic is preferred by a number of regulators and is quickly becoming the go-to option.

A key objective of RCA is to improve audit quality by having a better understanding of how audits can improve.  We expect all the firms we inspect to make continuous improvements so that, by 2019, at least 90% of FTSE 350 audits reviewed will be assessed as requiring no more than limited improvements.  Effective RCA should help to achieve this.

Financial Reporting Council (FRC)

 

The FCA requires the firm to put in place appropriate management controls and take reasonable steps to ensure that in handling complaints it identifies and remedies any recurring or systemic problems.

The Financial Conduct Authority (FCA)

 

The guidance in the framework states that organisations need a central team of experts in all types of risk and that staff who lead an investigation, or take part in an investigation team, will need an in- depth understanding of the investigation methodology and should be able to apply the tools and techniques in a variety of settings. 

Care Quality Commission UK (CQC)

 

Where a firm cannot demonstrate they are delivering fair outcomes to their customers they can expect tough action from us. 

The Financial Conduct Authority (FCA)

 

RCA that is not sufficiently robust may not identify the real root causes for findings.  If the wrong cause is identified, the wrong remedial action will be taken.

Institute of Chartered Accountants England & Wales (ICAEW)

 

It is important for complaints root cause analysis (RCA) to distinguish between a symptom and the root cause of a complaint.

The Financial Conduct Authority (FCA)

 

Audit regulators expect firms to investigate and understand the root causes of inspection findings, and to use them as the basis for determining activities and assessing the effectiveness of those actions.

International Audit & Assurance Standards Board (IAASB)

 

The Serious Incident Framework guidance states that providers should prioritise incidents that require a full Root Cause Analysis according to their available resources and that “if an organisation states that all incidents that led to harm must be investigated using RCA, the organisation must ensure there are enough staff with the expertise and resources to do this”. 

Care Quality Commission UK (CQC)

 

The IFIAR views robust Root Cause Analysis and implementation of responsive actions to be fundamental to improving audit quality.  It is critical that firms have processes in place that enable a timely, thorough assessment to identify recurring root cause issues – whether positive or negative – and to take appropriate actions.

International Forum of Independent Audit Regulators (IFIAR)

 

By applying RCA, audit reports add greater insight that improve effectiveness and efficiency, business performance and overall governance.

Chartered Institute of Internal Auditors (IIA)