Audit inspection unit defends its ‘consistent approach’

The director of the Audit Inspection Unit has dismissed suggestions from Ernst & Young that the reports on audit services of leading firms should be improved and made clearer.

The AIU published its in-depth reviews on the seven biggest UK firms for the first time this week.

The AIU, part of the Professional Oversight Board within the Financial Reporting Council, said that the audit firms’ practices were generally acceptable, but the reports also highlighted a series of flaws.

In its response to the review, E&Y said that it hoped the criteria on which auditors are judged in public reports would ‘develop over time’. It said it would ‘continue to work closely’ with the AIU.

AIU director Andrew Jones said most of the feedback from firms reviewed had been positive, adding: ‘We do develop the work we undertake and our processes each year but we are consistent in our approach between firms’

In the report on Ernst & Young ,the AIU said that its audit services were ‘generally good or acceptable’ but added that there was room for improvement in areas including the independence of some non-audit services and risk assessment.

The AIU criticised a number of E&Y audits for failing to show enough evidence that it was
meeting standards on independence of audit and advice services.

‘We considered there was insufficient evidence on file for one of the audits we reviewed to demonstrate that proper consideration had been given to the possible threats to the firm’s independence and objectivity arising from a tax audit partner who also provided tax advice to his audit client,’ it said.