Audit regimeAn audit regime is usually a rigourous set of forensic accounting methods that is used to detect fraud. It refers more generally however to any similar regime of verification of conformity to some standard, e.g. Kyoto Protocol, Cocoa Protocol, or some mandatory labelling scheme. Without such a regime, transparency is simply not attainable.
Most accounting reform includes strict audit measures to verify that new standards are met.
Financial privacy is often in direct conflict with the desire for any stricter audit regimes.
Characteristics of an effective audit regime include:
- harsh penalties for any misleading or fraudulent disclosures to the auditor that are strictly enforced
- publicly-visible reports and definitions, e.g. for capital categories
- an incorruptible profession of auditors that adheres to strict ethical codes, and whose careers are permanently and irrevocably destroyed by any serious impropriety
- strict standards to declare conflict of interest, and rules to prevent competitive arrangements that tend to create such conflicts, e.g. not permitting the auditor to also act as a consulant on meeting the regime's requirements.