Scepticism sits low on FDs' audit priorities

SCEPTICISM SITS low down the list of finance directors' priorities when assessing the quality of their auditors.

A survey of 188 finance directors by Accountancy Age's sister title Financial Director found that auditor scepticism ranked nine of 11 key traits when assessing their importance in gauging audit quality, scoring an average of 2.5 out of four. ‘Degree of challenge' was ranked seven of the 11.

Top of the pile was efficiency of audit process, scoring 3.7 out of 4. Other key traits included the reliability of the audit report; sector and business knowledge; communication skills; and the ability to spot mis-statements.

The future structure of the audit market, and the services provided by its participants, is very much up for debate. The Competition Commission said last week that auditors were focused on the interests of management above shareholders. The European Commission is also set to report on its findings into the audit market.

Financial Director's survey included 92 interviews with FDs of companies audited by the top six UK accountancy firms. FDs of 17 listed companies were interviewed, alongside 171 non-listed FDs.

Kevin Reed, editor of Accountancy Age and Financial Director, said: "While FDs of non-listed companies are more likely to use auditors as close-at-hand business advisers than for public interest entities, it is still worrying that auditors' scepticism and challenge rank below process efficiency when they assess audit quality.

"Investors in large listed businesses need to play a more active role in their companies' audit process. I hope that investors, or owners, of non-listed businesses are getting the most out of their auditors."

For more details on the survey, which includes information on the FTSE 350 audit fees, click here.