Election conversations: are audits necessary?

Foundation Elections
#1

Hi all,

I would like to bring this to the conversation since the area of accountability, transparency and governance has been at the forefront of the elections. It would be ideal to have a third-party external audit conduct a proper assurance assessment on NEM to ensure that all our documentation and process flows are well-organised. This could attract more projects with the confidence to build on NEM because of an independent audit.

Apart from that, there should also be an internal audit team to ensure that country and regional offices have a safeguard in the spending and allocation of resources.

Here are examples that have been observed:

  1. Tezos Hires ‘Big Four’ Firm PwC to Conduct External Audit - finances and operations.
  2. Cardano did an audit with an external company - engineering work
  3. Tether had issues with auditor - expectations with auditor

Are audits an essential part of governance? if so what kind of audit is important? when is a good time to do an audit?

FYI - by-laws mentioned to have an audit of the correctness of the profit and loss account and balance sheet.

Once at least in every year the accounts of the Company shall be examined, and the correctness of the profit and loss account and balance sheet ascertained by one or more auditor or auditors, and the provisions of the Act and any modification or re-enactment thereof forthe time being in force in regard to audit and auditors shall be observed.

Open to thoughts and discussion.

#2

Just to clarify, I know for a fact that SEA is undergoing an audit of its finances this month (end year) as I am handing over all of my financials.

That being said, the once a year audit for the CFO is a bit of a joke and it should be done quarterly, for finances anyway. Whether an external audit/auditor is necessary is up to the council after the bylaws are changed. So for me, having the bylaws changed and having crystal clear job descriptions and metrics is going to be #1. All other actions flow from that governance -wise.
Tether could not get an auditor to look at them because they didn’t want to be held accountable if any irregularities were found.

Re; the above audit, I don’t know who or what agency is doing the financial audit, only that I need to provide the financials. Which I’m more than happy to do.

Cheers,

Laura

1 Like
#3

Hi, I have been financial manager of a subsidiary of a listed group. I think a yearly financial audit conducted by a third party, of wich result is made public is enough. More would be too costly and time consuming. To insure correctness of finance is necessary for governance.

During a financial audit, the financial processes are audited, and it is enough. (Eg payment processes: conditions of payment requests, payment approvals, payment validations).

It would be useless to audit business processes, as the foundation should be proactive on them, or not be.

2 Likes
#4

Yes, ideally, all these should get out as a members report so that people know that audit has done and who is doing the audit.

This looks more like a nice to have rather than a need to have for now. Worth considering as an option but the most important should be the financials.

#5

I am for a third party audit. It is a big organization and it will help us run better. I also think it can inspire confidence in the community that the Foundation is doing well.

#6

I agree, can also help us pinpoint glut, plug holes, and reallocate funding where it is most needed, and to make sure the policies and initiatives set out for 2019 and beyond (ideally a 5-year plan) will be funded fully even with crypto price fluctuations.
L