Arthur Andersen Introduces The Business Audit Worldwide; Provides Clients Better Audits and More Insight on Business Risks.

CHICAGO--(BUSINESS WIRE)--Feb, 3, 1998--

"Major Advance" in Assurance Represents Two-Million-Hour

Investment

Arthur Andersen today announced it has deployed, worldwide, The Business Audit(SM), a major advance in auditing financial statements designed to give clients better and more timely insights to improve financial reporting processes and better manage business risks.

Over three years in the making, The Business Audit represents the latest and most significant enhancement ever of Arthur Andersen's assurance methodology. The firm developed it using an international team representing its worldwide organization and, to date, has invested more than two million hours in development and training.

The Business Audit is supported by proprietary business models and technologies that give assurance teams superior business insights as well as rich knowledge bases that bring the firm's cumulative experience to each engagement. Teams also can call on experts in dedicated centers of excellence who offer deep knowledge in specific risk categories as well as industries.

"With The Business Audit, we are taking a giant step forward for clients and our industry," said Steve M. Samek, global managing partner for Assurance and Business Advisory Services. "Our clients will receive improved financial statement audits and more insight to better manage their business risks. The result will help clients improve their financial reporting processes, enhance their business performance, and reduce damaging business and financial reporting surprises.

"The Business Audit is superior to traditional audit approaches for two reasons," said Samek. "First, it focuses on business risks, the underlying causes of financial surprises - not just on accounting records. And, second, it shifts the focus from simply inspecting the quality of a financial statement to actually building quality into the processes that control financial reporting and business risks.

"This is a fundamental change in our approach," he added. "The Business Audit marks the first time that a firm has been able to deliver the systems, tools and expertise necessary to bring to the financial reporting and assurance process the continuous quality improvement methods that have enabled manufacturing companies to dramatically improve quality over the past decade."

Business Risk Focus

Samek noted that businesses today are operating in a rapidly changing and increasingly complex environment. This offers both unparalleled opportunities and unprecedented business risks in countless areas, including information systems, electronic commerce, financial instruments, turbulent currency markets, and evolving business relationships and ventures.

"Managing business risk is an enormous challenge in today's business environment," said Samek. "We see headlines every day of bad things happening even to good companies because they have failed to identify and manage important business risk. While we cannot promise The Business Audit will prevent all business surprises, we are confident it can significantly improve the processes clients use to prevent them.

"Our confidence is based on the fact that The Business Audit focuses on identifying a client's business risks, based on a thorough understanding of the client's business," he added. "Within this context, one goal is to identify instances where a client's reporting process may have failed to consider an important risk or economic event. Another is to help the client focus on emerging business risks that may not yet be well-understood or managed."

Building-In Quality

Traditionally, auditors have often inspected-in quality by substantiating account balances after the fact. In contrast, The Business Audit, where possible, tests and relies upon the client's processes for controlling business risks and reporting information. Improving those processes over time results not only in more reliable financial reporting and more efficient audits, but also in improved business performance.

The Business Audit provides Arthur Andersen assurance teams with proprietary business models, powerful technology and rich knowledge bases, including:

-- The Business Analysis Framework, which provides a model for

understanding a client's business environment;

-- The Business Information Framework, which maps the information

flows within a client to understand its information systems and

related risks;

-- The Business Performance Review Tool, which analyzes client

financial performance and compares the client's performance to

others in its industry;

-- The Business Risk Model, which organizes and defines 78 business

risks, industry by industry, to help audit teams and clients

identify key business risks;

-- Global Best Practices Knowledge Base, that identifies best

practices for controlling key business risks. This helps

assurance teams and clients assess the effectiveness of existing

controls and provides recommendations for improvements.

-- Data Acquisition Tools that enable assurance teams to more

readily access client information systems to conduct tests and

assess risk controls;

-- Knowledge-sharing technologies, to ensure knowledge bases are

regularly updated with the best thinking of the firm based on

cumulative experience with clients;

-- Risk Centers of Excellence that provide deep knowledge to help

assurance teams identify, source, measure and control major

risks. Among others, current centers include business fraud,

computer risk management, Year 2000, treasury and derivatives 

instrument risks, government claims and contract risks,

electronic commerce, and complex accounting and reporting risks.

More than 125 teams in 10 countries field-tested The Business Audit, and client reaction to the methodology has been overwhelmingly favorable. The firm will apply the methodology to many of its largest audit engagements this year and expects full implementation across all engagements worldwide by 1999.

Arthur Andersen is a global multidisciplinary professional services firm that helps its clients improve their business performance through assurance and business advisory services, business consulting, economic and financial consulting, and tax and business advisory services. With more than $5 billion in revenues, Arthur Andersen services clients in more than 350 locations in 78 countries.

CONTACT: Ketchum Public Relations 

David Tabolt, 312/228-6870

Susan Brophy, 312/228-6874

or

Arthur Andersen

John S. Vita, 312/931-2676