Small firms hit back over audit quality record
Small firms have hit back at claims by Professional Oversight Board director Paul George that audit quality at the lower end of the market is declining
George raised the concerns over small firm audit quality in an interview with
Accountancy Age, where he said that increasing regulation and complex
accounting meant that small firms were struggling to maintain the same audit
standards.
Peter Mitchell, chairman of the
Society of Professional
Accountants, said the
POB should be ‘mindful’
of the types of audit work it referred to when suggesting a lowering of audit
quality.
Mitchell said it was only in very specialist areas where there might be a
concern about audit quality, such as the audits of businesses regulated by the
Financial Services Authority, which had become very technical and were no longer
financially attractive for smaller firms.
Jonathan Russell, president of the UK 200 Group, said that his organisation
carried out audit quality assessments annually and had found no evidence of a
decline in audit quality: ‘In most cases we have found that the quality of a
smaller firm’s audit can actually be of a higher quality than that of a larger
one.’
He argued against George’s view that smaller firms needed to consolidate in
order to maintain audit quality. ‘Your basic audit is not going to be improved
by increasing in size,’ Russell said.