FDs question their faith in audit
Almost one in three of the UK's finance directors have had their confidence shaken in the UK audit profession by the scandal surrounding the collapse of US energy giant Enron and its auditors Andersen.
Results of the latest Accountancy Age and Reed Accountancy Personnel Big Question show trust in the audit profession is at an all-time low after Andersen confessed to shredding documents relating to Enron and making an ‘error in judgement’ while working on the company’s accounts.
Of the 300 FDs surveyed 28% said the Andersen scandal had reduced their confidence in the UK profession. Making some of the harshest remarks to be published about the profession, one FD said Enron ‘has shaken everyone’s confidence’. Another said: ‘Auditing is a complete shambles’. Another said he had never had any faith in the audit process.
The results come as Accountancy Age this week publishes its ten-point plan for rebuilding shattered faith in the profession. The plan presents measures for debate and highlights the headline areas of concern.
John Ormerod, UK managing partner of Andersen, has only this week moved to defend his firm against the mounting allegations against his firm in the US. On Monday the firm was forced to deny it was ‘unusually close’ to the Labour government.
Among the 61% who said their confidence had not been affected the reaction was still one of disappointment. Rober Stell, FD at Bradburn Stell, said.
‘There was no great confidence in the audit profession prior to recent events’.
One FD felt said his confidence in the worldwide profession couldn’t get much lower. He said: ‘When I look at what value our (top five) auditors add and the risks they fail to pick up it is hard to have any confidence at all.’