Audit - Reform on the cards

The government has given its clearest signal yet that it intends to reform the statutory responsibility of auditors.

Last week’s long-awaited and far-reaching company law review concluded there is an expectations gap between auditors’ and the public’s views on the breadth and depth of assurance that auditors’ reports should represent.

The review steering committee suggested extending the auditor role in relation to various stakeholder groups to take auditors further into providing assurance on ‘softer’ forward-looking financial and non-financial information, while also making a clear statement on the role of directors, auditors and the company.

Finance directors were divided on the government’s signal. Sarah Blackburn, head of group operational audit at vehicle leasing company Lex Service, agreed there was a need for clarification given the discrepancy between management expectations and actual auditor functions.

But BICC FD Ron Henderson, who contributed to the review as a representative of the 100 Group of FDs, dismissed the argument that management misunderstands the function of external audit.

‘The auditing profession says there is an expectations gap but we are working to close that, and good auditors provide excellent added-value service.’