Mary Pat McCarthy

1
Auditing Profession In The New Economy

• Mary Pat McCarthy
• Vice Chairman
• Information, Communications Entertainment
• KPMG LLP
• Financial Executives Institute
• November 6, 2000

2
The Current Audit Risk Landscape
Independence
Fraudulent Behavior On The Rise
The e Imperative
Professional Practice Risk
Increased Regulatory Oversight
Cost and Availability Of Talent
New Competitors
Downward Pressure On Pricing
3
Marketplace Trends
Underscoring the need for systems-based auditing

• Reduced cost
• Increasing speed
• Seamless transactions
• Constant feedback
• Relentless change
• Speed to market
• Greater productivity
• New business models

Increasing risks
4
Todays Environment

• Information flows are constant
• Volume of information increases
• Everything is connected

5
The New Digital Marketplace
PURE DOT.COM
All digital products processes
CommerceOne
DIGITAL
Principally digital products processes
Amazon.com
DIGITIZED
Tangible products offered both traditionally and
digitally Cisco
TRANSITIONAL
Tangible products seeking digital outlets GM
Tangible products Alcoa
TRADITIONAL
6
New Audit Approaches Business Measurement
Focused

• Strategic analysis
• Business process
• analysis
• Risk assessment
• Business
• measurement
• Continuous
• improvement

A structured approach to move to
systems-based auditing and build a foundation
to function in a pure e-environment
7
What Auditors Will Become

• Auditors of the future will help organizations
  and individuals achieve their objectives and
  succeed in the new economy through measuring
  performance, managing risks, and leveraging
  knowledge.

8
Building An EnhancedProduct Architecture
All with C O M P O N E N T S

• Attest / Audit
• Business Risk Management
• Performance Measurement
• Knowledge

e
9
Real Time Auditing

• Close books daily (Cisco Experimenting)
• Sign off on audit daily
• Predictive Modeling and Pattern Recognition
  Software

10
Key Message

• The business environment demands decisive action