SEC to Focus on Audit Failures: What You Can Do to Protect Your Firm

MILWAUKEE – July 12, 2013 – Two weeks ago, the Securities Exchange Commission (SEC) announced the addition of three new initiatives that will build on its Division of Enforcement’s ongoing efforts to identify areas of market risk though the use of cutting-edge technology. One of which is The Financial Reporting and Audit Task Force, whose main objective will be to identify securities-law violations relating to issuer reporting and audit failures. As regulators continue to implement stringent oversight through the aid of advanced technology, it’s important for firms – now, more than ever – to do the same as a means to mitigate compliance risk. More specifically, it’s particularly important to equip your internal audit department with the resources and tools necessary to efficiently identify gaps in compliance, before taking on FINRA’s or SEC’s costly ‘second opinion’.

What ‘good’ looks like for internal audits is shifting, and a ‘one size fits all’ approach to audit management most definitely does not apply in today’s complex regulatory environment.  As a result, a majority of organizations have invested in the development of an internal branch audit management system to help conduct their mandatory OSJ and non-OSJ branch audits. However, with heightened expectations, constrained budgets, and a rising need for skilled risk resources, compliance departments are under extreme pressure to establish an audit management system that can do more with less.

Identifying a gap in the market, Quest CE refurbished its Branch Audit solution to address the many pain points associated with similar, on-the-shelf products. Seeking industry feedback, the following items were considered ‘must haves’ for their Branch Audit Management system.

Mobile Accessibility

In the financial services industry, the mobile dynamic is catching on. Because a majority of the work an auditor does takes place in the field, it’s extremely important to invest in a solution that features mobile accessible workflows. Whether working in the corporate office or a remote location, Quest CE’s solution allows auditors to complete branch audits as they occur in real time, avoiding the expensive, time consuming, error-prone process of manual data manipulation. Additionally, Quest CE’s system features a reactive design layout that allows menu items and audit questionnaires to expand and collapse as needed, allowing tablet users to efficiently utilize valuable screen real-estate.

Offline Sync Capabilities

While some auditors may have access to the internet through the branch they are auditing, others may experience difficulties connecting to a corporate network. As a result, Quest CE’s solution features offline sync capabilities, allowing auditors to access their audit documentation no matter their current location or network status. With this unique feature, auditors can edit audit questionnaires through a static web browser, which can then be synced to the master database when an internet connection becomes available.

Natural Workflows

Equally essential is a solution that is simple, clean, and user-friendly. Checklists need to be readily available, questions need to have enough room to formulate comprehensive answers, and navigation needs to reflect the natural workflows that an unpredictable audit can take. When straying away from paper-based solutions, it’s important that your web-based solution is able to mimic a natural conversation. As a result, Quest CE’s audit questionnaires feature pipe logic, so once an interviewee answers an audit question, the auditor will be immediately alerted to the necessary follow-up questions/steps that need to take place.

Auto-Generated Deficiency Letters

The benefits of a web-based solution are seen in its ability to automatically generate risk assessments and audit result findings. As a result, Quest CE’s solution allows auditors to quickly identify compliance malpractice through the tool’s automated deficiency alerts and reporting dashboard. Upon completion of a branch inspection, an automatic summary of the audit is produced to pinpoint issues that require immediate attention. Choosing from a list of standardized or customizable follow-up letters, the system will automatically pull deficiencies into the letter template, allowing auditors to easily create and share electronic documentations.

The world of an auditor is changing. One factor common to all future internal audit programs will be the need to assess current processes and procedures. In practical terms, firms need to be aware of, and embrace, the changing technological environment; otherwise they may not be in a stable position to appropriately address internal risk.

Click here to watch a video-cast of Chief Information Officer, Patrick Torhorst, discussing the benefits of Quest CE’s Branch Audit Management Tool. To learn more about Quest CE’s Audit Management features, visit the product page or email


About Quest CE

For over twenty-five years, Quest CE has been the premier provider of Compliance Education to the financial services industry. In addition to offering Providership Administration and insurance continuing education (CE) for professionals holding insurance licenses and professional designations like the CFP, CPA, CLE, CIMA and CLU/ChFC designations, Quest CE also provides a complete spectrum of FINRA compliance training solutions including annually required Firm Element Training for registered representatives, on-demand Annual Compliance Meetings, Annual Compliance Questionnaires, Needs Analysis Surveys, Outside Business Activity Tracking, Gifts and Entertainment Tracking and Political Contributions Tracking.

Serving more than 630 leading insurance carriers, broker-dealers, banks, and other financial institutions, Quest CE is committed to providing advanced custom solutions at cost effective rates, while providing a level of service that greatly surpasses their competitors. Quest CE is the single source solution for organizations seeking training and compliance needs.