Power of audit debate shifts perceptions - marginally
Divergent opinions still exist over the level of rigour applied by the audit profession
ON THE CUSP of celebrating its 10th anniversary later this year, the Audit Quality Forum (AQF) held its latest quarterly meeting to discuss whether the industry is ‘making the step change in thinking necessary to respond to the financial crisis’.
Kicking off with an electronic vote at the beginning of the event to gauge if perceptions had been influenced by the quality and persuasive powers of the ensuing debate, just 7% of the audience initially pressed the ‘yes’ button, while over a third (36%) voted ‘no’, with a 57% majority giving a qualified ‘yes, but have further to go’.
Chaired by Deloitte financial services research chief, Margaret Doyle, the debate proper followed after a pithy introduction by AQF chair, Charles Bowman.
Robert Talbot, Royal London Asset Management chief investment officer, was adamant that positive progress had been made since the financial crisis began and backed the vigorous promotion of scepticism, stressing that it was something that “needs to be drilled into trainee auditors and trained auditors”.
Robin Freestone, chief financial officer of FT publisher Pearson and chair of the UK 100 Group, which represents the views of FTSE 100 FDs, was also heartened by evidence of solid progress to date, but expressed concerns that over regulation could be a step too far. He illustrated his anxiety by revealing that HSBC now had over “23,000 regulatory people”, adding “‘is this where we really want to be?”
Eric Tracey, senior finance executive, spoke up from the floor, that “every time there’s a scandal or failure and the accountancy firms come out and say we applied by all the rule, it’s a disaster because that says we need to change the rules. We really do need to take that challenge on.”
James Chalmers, PwC’s head of assurance, said he thought transparency was a force for good while Richard Fleck, chair of the FRC’s conduct committee, asked whether “people have confidence in the independence and competence of auditors”, pointing to the perception that “previously the audit opinion was like a black box that no one could open or understand”.
After an hour of debate, votes were re-cast. While the change was far from seismic, the ‘yes’ votes increased by 3% to 10%, the ‘no’ vote dropped six percentage points to 30% while the ‘yes, but have further to go’ vote strengthened by three to 60%.
The event was held in the Freshfields Auditorium, Fleet Street.
The AQF exists to unite auditors, investors, business and regulatory bodies, with the aim of encouraging stakeholders to work together by promoting open and constructive dialogue about transparency, accountability, reporting and confidence in the independent audit.