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Understanding How the Financial Statement Auditor Considers Cybersecurity Risk

With this voluntary, market-driven framework, companies can also communicate pertinent information regarding their cybersecurity risk management efforts and educate stakeholders about the systems, processes, and controls that are in place to detect, prevent, and respond to breaches. The framework enables CPAs to examine and report on management-prepared cybersecurity information, thereby boosting the confidence that stakeholders place on a company’s initiatives. One example is the cybersecurity risk management reporting framework developed by the American Institute of CPAs (AICPA). This dialogue can be a way to help board members develop their understanding of how the company is managing its cybersecurity risks.Īdditionally, this post may help board members with cybersecurity risk oversight learn more about other incremental offerings from CPA firms. The dialogue that these questions spark can help clarify the financial statement auditor’s responsibility for cybersecurity risk considerations in the context of the financial statement audit and, if applicable, the audit of internal control over financial reporting (ICFR). This post is not meant to provide an all-inclusive list of questions or to be seen as a checklist rather, it provides examples of the types of questions board members may ask of management and the financial statement auditor. This post provides questions board members charged with cybersecurity risk oversight can use as they discuss cybersecurity risks and disclosures with management and CPA firms.

Understanding how CPA firms can assist boards of directors in their oversight of cybersecurity risk management.

Understanding management’s approach to cybersecurity risk management.

Understanding the role of management and responsibilities of the financial statement auditor related to cybersecurity disclosures.

Understanding how the financial statement auditor considers cybersecurity risk.

The questions are grouped under four key areas: In fact, four of the leading 13 information security and cybersecurity consultants are public accounting firms. CPA firms have played a role in assisting companies with information security for decades. As boards tackle this oversight challenge, they have a valuable resource in Certified Public Accountants (CPAs) and in the public company auditing profession.ĬPAs bring to bear core values-including independence, objectivity, and skepticism-as well as deep expertise in providing independent assurance services in both the financial statement audit and a variety of other subject matters. Boards of directors face an enormous challenge: to oversee how their companies manage cybersecurity risk.

Companies are facing not only increasing cyber threats but also new laws and regulations for managing and reporting on data security and cybersecurity risks.