Joint audits could solve crisis
Sustained allegations of a lack of competition among the Big Four for audit work is driving some mid-tier firms to back the introduction of joint audits as a solution to the concerns over auditor independence.
Link: Joint audits on the agenda
The joint audit, they argue, could provide greater choice and could soothe government and regulators’ concerns over the reduced number of firms auditing the UK’s top companies.
In July authorities said they would take another look at competition issues following the ignominious collapse of Andersen, leaving just four firms providing audit to the FTSE-100.
In an article for Accountancy Age this week John Mellows, senior partner at Mazars, writes: ‘Why isn’t joint audit higher on the agenda of those looking at audit reform? I fear that the answer may be one about which the profession is becoming increasingly worried – it is not in the commercial interest of the “all-powerful” Big Four.’
Big Four firms however argue that joint audits will only solve perception issues and have raised concerns over the logistics of the audit process.
Replying to calls for joint audit, Ted Awty, head of assurance at KPMG, says: ‘If perception is the driver, then joint audits may have a role. But for real ways to achieve better governance and greater independence, they can be a red herring. They are potentially costly and complex, which is why they are rare among large global companies.’