Audit, as we all know, is a mature market. Beset with problems such as regulation and litigation, with little growth and with auditors themselves helping to kill off their own business by insisting on price-cutting for the last decade or so, the audit has not exactly been a glamour business.
The poor performance is especially notable when compared with the fast movers of the professional service business, such as tax and management consultancy. But there is a chance that the spiral of audit gloom is about to end.
Our North American cousins have spotted a business opportunity which will turn audit – sorry business assurance – back on the growth path and will be the long-awaited catalyst for electronic commerce.
For the last couple of years, banks and IT companies have been predicting that doing business on the Web is going to be phenomenal. For instance, VeriFone, a Hewlett-Packard subsidiary, last month told us online shopping would be worth $220bn (#140bn) by 2001.
But while the experts predict great numbers, consumers and businesses are keeping their hands firmly in their pocket. Their reluctance is based on two factors: first handing credit card numbers over to goodness knows who in cyberspace; secondly, even if we want the service on offer we are reluctant to do business with an outfit about which we know nothing.
The Americans and Canadians reckon they can overcome these problems with WebTrust – a symbol on a Web site which would immediately tell would-be purchasers that this site and the underlying business has been verified by a respectable audit/business assurance firm. The punter could click on the WebTrust Seal and find out more information or they could just rest assured that if they are promised delivery within 28 days then that is what will happen.
So serious are they about this that the US and Canadian accountancy institutes have sunk a remarkable $2m in the venture. Canadian Institute director Jim Sylph was in London a few days ago explaining that WebTrust is working and they are now licensing accountancy firms – international and national – to perform the assurance work. A couple of sites are actually carrying the symbol.
Assurance work of this type could be the future for the auditing profession.
If so, how well equipped is the UK to take up the challenge? The North American professional bodies are well in the lead on this one – and ominously for the UK – a couple of the Big Six have gained global licences.
WebTrust could come to nought. On the other hand, unless the UK profession takes a long hard look at the possibilities of electronic commerce-based assurance services, UK auditors could find themselves shut out of a lucrative and important new market.
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