Auditing Corporate Risk Management - a Critical Analysis of a German Particularity

The ICFAI Journal of Audit Practice, Vol. 1 (2004), No. 2, pp. 49-64

19 Pages Posted: 12 May 2004 Last revised: 15 Jan 2013

See all articles by Michael Dobler

Michael Dobler

Dresden University of Technology - Faculty of Economics and Business Management

Date Written: November 1, 2003

Abstract

In 1998, the German legislator obliged public limited companies to install a system to detect risks endangering corporate going concern at an early stage. Moreover, he required the auditor of annual financial statements to audit this risk monitoring system. This task is an international novelty forestalling the Sarbanes-Oxley Act. To contribute to the emerging international concern from a German point of view, I discuss the legal and the professional approaches to auditing corporate risk management. Highlighting specific legal and factual limitations and using empirical data from audit opinions of German companies listed in the DAX 100, I investigate the impact of the new audit obligation on the expectation gap in auditing. The results suggest doubts whether the auditors will fulfil the supervisory board's needs or the public expectations in auditing. At least, reporting on the audit shows deficits in both regulation and practice.

Keywords: auditing, audit opinion, expectation gap, internal control, risk early recognition system, risk management, risk reporting, Sarbanes-Oxley Act, test of controls

JEL Classification: G30, G39, M40, M49

Suggested Citation

Dobler, Michael, Auditing Corporate Risk Management - a Critical Analysis of a German Particularity (November 1, 2003). The ICFAI Journal of Audit Practice, Vol. 1 (2004), No. 2, pp. 49-64, Available at SSRN: https://ssrn.com/abstract=540862 or http://dx.doi.org/10.2139/ssrn.540862

Michael Dobler (Contact Author)

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Helmhotzstr. 10
Dresden, D-01062
Germany

HOME PAGE: http://tu-dresden.de/bu/wirtschaft/wus

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