Institutes sceptical of joint audit plan

Senior figures at two leading accountancy institutes have warned that joint
audits of large companies may be impractical and increase costs for business.

Supporters of audit reform have suggested that joint audits could safeguard
the stability of the audit market and increase competition.

Earlier
this month, the European Commission said that joint audit could
help mitigate “disruption in the audit market if one of the large audit networks
fails”.

Joint audits are used in a number of countries including France and the
United States. But at a House of Lords inquiry into the audit industry
yesterday, representatives for the ICAEW and the ICAS said that they were
sceptical about the benefits of dual audits.

Iain McClaren, vice president of ICAS, said that Denmark abandoned joint, or
dual, audits in the early 1990s because they were “causing additional business
costs without business benefits”.

Robert Hodgkinson, executive director, technical at the ICAEW, said that
company audit committees were allowed to appoint joint auditors but “no one is
doing this”.

The introduction of dual audits in the UK would alarm the Big Four
accountancy firms.

Earlier this month, a senior partner at a Big Four firm told Accountancy Age
that joint audits could
increase
the likelihood of fraud and would not increase quality of audits.

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

Further reading:

Institutes
concede reform required for audit