Audit watchdog says profession must up its game

POB chair

Barbara Mills

Watchdogs have warned that accountancy institutes must improve their
monitoring of auditors as the profession continues to come under fire for its
work in signing off company accounts.

In a report to business secretary Vince Cable, the Professional Oversight
Board said it had “significant concerns” about the work of the institutes
charged with keeping an eye on audit firms.

Much of the regulatory practice was of a high standard, the report said.

However there were “aspects of regulatory activity at some recognised bodies
that give us significant concerns,” POB warned.

Specifically, POB chiefs called for the monitoring of approved training
offices to be more rigorous.

Procedures for verifying audit experience before awarding audit
qualifications also needed to be more robust, while complaints against auditors
had to be investigated “without undue delay.”

While many bodies have taken many positive steps in response to previous
recommendations, POB was pessimistic about accountancy institutes being able to
check all the firms under their watch.

“We are not confident that all recognised supervisory bodies will meet their
statutory obligation to inspect all relevant audit firms at least once in the
six years from June 2008 without close monitoring and decisive action.”

Market Participants Group recommendations on audit choice had now been
implemented, but there was only “limited evidence that they have had a
significant impact on market concentration,” POB added.

Dame Barbara Mills, chair of POB, said the report, which covered a range of
issues including the quality of audit at the large audit firms, to oversight of
professional bodies regulation of their members, was particularly important at a
time when there was “much debate on the value and nature of audit for the

“Our work in 2010/11 will pay particular attention to how those we regulate h
ave addressed the issues we have raised,” Mills warned.

Further reading:

blind on audit quality

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