Regulators poised to publish audit firms’ shortcomings

The regulator of the accounting profession is to publish reports on audit
shortcomings at individual firms, it said this week, opening the way for
US-style reporting on auditors.

The moves come after extensive criticism of the Audit Inspection Unit’s lack
of transparency. Accountancy Age has repeatedly highlighted the issue,
which led to mid-tier firms claiming the body was helping to maintain ‘myths’ on
audit quality by reporting the mid-tier and Big Four separately.

The regulator’s inspection unit is proposing to publish the inadequacies of a
firm’s audit methodology along with weak internal controls.

The inspection reports are even set to go further than US reports on
auditors. US regulator PCAOB’s criticisms of auditors are only made public if
the problems
are not corrected one year after being raised.

Firms will have a chance to respond to the AIU’s report before it is made
public and the details of companies concerned will not be revealed but reports
will be mad public regardless.

BDO Stoy Hayward managing partner, Jeremy Newman, said: ‘We hope all
initiatives to increase transparency of the outcomes of independent audit
inspections will help to break down institutionalised prejudice about audit
quality and the prevailing assumptions that bigger means better in this

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