Big Four back audit inspection moves

The regulator’s plan to publish individual audit reports is ‘right and
appropriate,’ one senior Big Four figure said this week.

Others also backed the proposal, with some reservations about what the
reports will contain.

Peter Wyman, head of professional affairs at PricewaterhouseCoopers, said:
‘We’ve reached the stage where something along the lines of what they’re
proposing is right and appropriate.

‘I do think that it is important that a proper reflection of what the AIU has
found, finds its way into the report. Most people don’t read such things and
then it gets much attention when a report then comes out. So it does need to be
balanced and proportionate.’

KPMG’s head of audit, Richard Bennison, said: ‘Generally I think we accept
that there has to be some enhanced disclosure of what the AIU is doing and
finding on individual firms. The key is in the reporting. My concern is that if
it is all negative without too much balance about the positives of what a firm
does, it will have a counter-reaction in the market.’

Martyn Jones, a Deloitte partner, said: ‘Clearly what they’re trying to do is
put in place a response to that part of companies act which extends the scope of
the Freedom of Information Act. A matter that is very important for firms is
that the reporting is balanced, so that it can highlight the features of the
audit firms, giving proper weight to the good things that the firms do by way of
developing the right approach to promoting audit quality.’

Wyman added that the legal issue would be complicated: ”I sincerely hope we
don’t have to end up using laywers. It would suggest the professional
relationship with the AIU has not worked.’

Jones said: ‘We haven’t; and haven’t needed to use lawyers for this process
in the past. We take the view that the process will be constructive, as always,
and will be helpful in enabling firms to continually challenge the nature of
their audit processes. It looks like we’re moving into an area in which much
more transparency is taking place and we have to have constructive relations
with the AIU, which is important to having full and frank regulation.’

E&Y has not as yet offered any public comment on the moves.

Further reading:

Regulator poised to publish
audit firms’ shortcomings

Pressure mounts to name

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