PracticeAuditAuditors should reveal more about potential risk, say readers

Auditors should reveal more about potential risk, say readers

Audit reports should provide greater detail, Accountancy Age readers say in a poll

AN EXTENDED AUDITOR REPORT will provide “more value” to stakeholders, according Accountancy Age readers.

Of 63 readers that voted, 62% said that auditors need to reveal more detail about potential risk, while the remaining 38% of readers said that auditors cannot rubber-stamp management’s decisions.

Earlier this month, it was announced that auditors would be required to warn investors about the risks within the companies they audit. The new regulations, proposed by the Financial Reporting Council, were ordered as part of a “step change” in the way audit reports are structured.

Criticism that auditors’ reports are uninformative has led to a consultation, launched by the reporting watchdog, to extend their scope to include a commentary of the “risks of material misstatement” identified by the auditor.

Nick Land (pictured), chairman of the FRC’s audit and assurance council, said the new rules would provide a step change from the “traditional binary pass/fail model” of audit report.

He added that the proposals “close the circle” by requiring the auditor to disclose information about the audit, within the auditor’s report itself.

The consultation period will end on 30 April 2013.

Take part in the latest Accountancy Age poll:

Will the Competition Commission’s proposals achieve its stated aim of engendering greater competition in the FTSE 350 audit market?

 

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