KPMG chief calls for audit reform

KPMG’s senior partner has added his voice to growing calls for reform to audit in the wake of the crisis.

In a speech at the ICAEW on Wednesday John Griffith-Jones he said it is was time for “really bold thinking” about the future of audit.

He suggested auditors might work “collaboratively” with regulators and rating agencies, along with boards and management to discuss risk.

“What is the point, they and others ask, of doing extensive and increasingly elaborate audits of the financial accounts of our banks, when audits failed to identify the huge and systemic risks which led to the near collapse of the Global banking system in the Autumn of 2008?” he said.

“It is a straightforward question; It deserves a straightforward answer.”

It followed an earlier call from PwC senior partner Ian Powell to reform the audit model.

“The overall model is long overdue some serious market-wide discussion. For me, the fundamental questions revolve around the scope of the audit; should this be extended and the nature of audit reporting extended with it,” he said in an April speech to ICAS members.

Also in April, Graham Clayworth, audit partner at BDO, said the profession needed to consider providing assurance around a company’s business model and risks, typically, “front of the book” disclosures.

“We have to ask what comfort the auditor can give in terms of the information that is in the front… “The concession that the profession will have to make for additional liability limits will be to extend work that the auditor does at the front of the book,” said.

Further reading:

Senior auditors renew calls for liability reforms

Top firms launch search for bigger role in company audits