The growth in audit has been subdued, according to the 2008 Top 50 survey.
With a growth rate of only 4.8%, the total combined audit fee income this year
But this doesn’t necessarily mean this service line will stagnate in the next
Moves abroad on standard changes could mean an upward swing as the US
authorities quicken their pace on the adoption of IFRS for Wall Street listed
The US is expected to announce a framework this year which will detail
objectives that must be achieved if US companies are to adopt international
The completion of compliance work related to Sarbanes-Oxley rules may have
been blamed for the slowdown in audit income for the profession, but US adoption
of IFRS could offset this.
KPMG’s head of assurance, Richard Bennison, said this could be a key
opportunity for the UK firms.
‘The move by the US to adopt IFRS, as well as one or two other countries,
could trigger businesses to embark on a conversion project. This would be an
opportunity for the UK firms to step in and help their colleagues on those
conversions. This would be quite a big opportunity,’ said Bennison.
But, the valuation work that firms did with banks for the December year ends
look set to taper off also.
‘We saw a bit of incremental work on financial institutions where we looked
at their models and fair value. Frankly this didn’t increase audit revenue
dramatically. And the banks will now use the same models as they did last year.
There won’t be significant change year on year,’ said Bennison.
Deloitte’s head of assurance, Martyn Jones, confirmed that regulatory
developments drive audit revenues, along with upcoming accounting developments.
‘Clearly, through the credit crunch there is a great need in many cases for
more work arising from additional efforts in valuation and going through certain
issues,’ explained Jones. ‘Increasingly, when you stand back and look at the
revenue audits of large companies, you find they are driven by regulatory
change, and every time new standards or others are issued, it has an impact on
the cost of audit.’
Grant Thornton’s head of professional affairs, Steve Maslin, said that audit
revenues were also different because of the different items firms chose to
include in their services lines. ‘These classifications might move on from one
year to another, and these would impact on growth,’ said Maslin.
UK senior partner Phil Verity has been elected for a second term at Mazars
An audit partner has been appointed at Grant Thornton in its North West offices
KPMG has been appointed with “immediate” effect as the auditor of Dorcaster
The audit for Ibstock will be taken over by Deloitte following a competitive tender process