The magnifying scope is focusing on all aspects of the sector
The multitude of reviews, some of which are ongoing, are being conducted by regulators, politicians and government departments, each separately looking at audit’s effectiveness, competition across the sector, and its future in general.
High profile failures of big high street names have captured the headlines and raised questions of ‘where were the auditors?’ resulting in some having a lack of confidence in the sector’s effectiveness.
Concerns have also been raised over a conflict of interest in firms selling consultancy services, while their auditing arms are carrying out an audit in the same company.
This has prompted suggestions that a full structural or operational split could be the answer.
Outside of the reviews and reports, the general public have identified what they see as one answer to improving corporate reporting; a good and clean audits.
Despite audit being under growing and intense scrutiny, the public still regard it as part of the solution to what is perceived as unacceptable corporate behaviour.
The purpose of an audit is to ensure that financial statements give a true and fair view, ensuring that material fraud is detected, and appropriate levels of professional scepticism are applied.
Everyone with an interest in financial reporting and strong corporate governance has a responsibility to work together to address the public’s legitimate concerns about audit.
It is clear that the profession must continue to focus on improving audit quality, working proactively with other stakeholders to support better understanding of the auditor’s role.
But, most importantly, all stakeholders connected to the audit process; such as regulators, professional bodies, investors, governments and the media; have a responsibility to inform the public in a fair, balanced and understandable way about audit regulations and standards. It is in the public interest that they do so.
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