Auditors are too ‘combative’ with companies, the Hundred Group of Finance Directors has said.

The group said that regulation had led to overly ‘rules-based’ audits, and that auditors lacked business understanding.

In a sharply worded response to a consultation on audit quality, the body also said the failed disciplinary case against professionals associated with collapsed bus group Mayflower had damaged the profession.

Responding to the consultation, Ken Lever, the Hundred Group’s financial reporting committee chairman, said: ‘The growth in complexity of reporting is leading to a greater reliance by audit firms on their technical departments that apply “rules” to a set of facts without necessarily having a deep knowledge of the circumstances or business context.

‘The profession is increasingly moving towards a more combative relationship with companies which discourages co-operation which ultimately could have an indirect impact on the quality of the audit.’

The response continued: ‘The spread of frivolous litigation claims and the failure of the AIDB in the Mayflower case to provide a prima facie case are all unhelpful to promoting confidence in the marketplace and in the audit firms themselves,’ and added that the profession was ‘somewhat under siege’.

The criticisms of firms and the regulators are a rare intervention by the influential group of FTSE FDs.

KPMG’s UK head of audit Richard Bennison said he did not know where the Hundred Group’s comment stemmed from. ‘It might be from the strain on companies, particularly the large ones doing IFRS conversions. ’ he said.

BDO managing partner Jeremy Newman said: ‘There needs to be a positive relationship but you can’t do a good audit by beating each other up. Once upon a time, you could answer questions. [Because of auditor independence rules] now you have to tell the client that they have to work it out for themselves.’

FRC chief executive Paul Boyle said: ‘If the Hundred Group is arguing that the relationship between the audited company and the firm should be cosy, then that would be a mistake. No doubt in the last few years independence standards have tightened somewhat. But if I were an investor, reading that comment, I might think it’s a good thing.’