The Greensill Bank and the Necessity of Digital Audit Methods

The Greensill Bank was at the center of a financial scandal that not only shook the German financial world but also raised questions about the integrity and accuracy of financial reporting. In an interview with Finance Magazine, I expressed concerns based on the auditor's report about the audit methods related to Greensill Bank and emphasized the urgent need for digital solutions in auditing practices.

The Greensill Bank, a subsidiary of Greensill Capital, faced liquidity issues when doubts arose about the quality of its assets, particularly regarding bonds from companies associated with British steel magnate Sanjeev Gupta. This led to its closure by the German Federal Financial Supervisory Authority (BaFin) in March 2021.

In my interview with Finance Magazine, I pointed out weaknesses in the integrity and accuracy of accounting-related data, especially regarding the lack of authorization concepts and process weaknesses in functional separation.

During the audit procedures, the "sample-based" activities caught my attention. It seemed to me that the selected transactions were examined mostly manually. Given the risk that the "accuracy of financial reporting is compromised," I would have expected data analyses to be included in the audit procedures. As expected, I could not find any information on how the sample was selected and how it was ensured that it was representative.

My conclusion: I would have expected more emphasis on digitalization.

Given the incidents at Greensill Bank, it is crucial that auditing practices be modernized and adapted to the challenges of today’s financial world. The future of financial reporting lies in the integration of digital solutions that not only increase efficiency but also ensure the integrity and accuracy of the data.

Further Reading Recommendations:

Supplementary Page for the Book "Accounting Fraud"

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