Joint audits will increase fraud: Big Four partner

Michel Barnier, EU commissioner

The introduction of joint audits could increase the likelihood of fraud
according to a senior Big Four partner.

The partner, who did not want to be identified, said the introduction of
joint audits in the UK could increase the chance of fraud occurring and would
not increase the audit quality.

“A crook could deliberately see an advantage in having two sets of auditors,”
he said.

“It needs to be borne in mind that the biggest fraud that ever took place in
the UK, namely BCCI, had joint auditors.”

The joint-audit system, used in France, involves two auditors, unlike the UK
system where there is only one.

A European Commission green paper on audit reform, released on Wednesday,
suggested joint audit as a way to mitigate “disruption in the audit market if
one of the large audit networks fails”.

However, there is little support for the proposal among UK auditors, who fear
it could increase the likelihood of fraud or enable companies to play one
auditor against another in the board room.

The partner, speaking before the release of the EC green paper, said joint
audits would also hit businesses recovering from the recession.

“It seems a bit of a disconnect in the UK context calls for joint audits and
a desire to see the private sector create profits and jobs,” he said.

David Herbinet, head of public interest markets at mid-tier audit firm
Mazars, is pushing for the dual-audit system to be adopted.

“The mood is clearly there for change,” he said.

“People who believe the status quo can continue are in the prehistoric age.”

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