FDs push for auditor rotation

Instead, more than 50% believe ‘best practice’ will drive change, according to the most comprehensive survey so far of financial thinking post-Enron.

The survey of 800 readers of Accountancy Age’s sister title Financial Director follows rising disquiet on both sides of the Atlantic about just how close auditors and their clients should get.

As well as savage criticism of both Enron and its auditor Andersen over the collapsed energy giant’s use of off-balance sheet vehicles, attention has also been focused on the likes of troubled insurer Equitable Life, which retained Ernst & Young as its auditor for more than 100 years.

But despite those and other concerns, almost two-thirds of respondents oppose the idea of an outright ban on non-audit work being given to the group auditors.

‘The age of using audit as a loss leader is over,’ said one.

Just under 60% of FDs believe that their company or audit committee has been giving adequate thought to the question of auditor independence.

Some two thirds of FDs believe auditors should do more to ensure there is no fraud or other irregularity in the company accounts.

But they are evenly split as to whether they should pay more for the service. ‘I believe companies do not get good value for money from their audits,’ said one.

Another said: ‘I would be happy to pay higher audit fees if I felt I was getting value added.’

The survey, conducted in mid-February, offers some comfort to Andersen. Though three-quarters of respondents expect Andersen’s corporate clients on both sides of the Atlantic to consider switching firms, more than 40% of FDs would be prepared to give the firm the benefit of the doubt over its role.

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