For a while it looked as though fortune would smile on Lee, when the winner of a similar bet, having heard about his plight, decided to present him with £15,000 as a goodwill gesture. Unfortunately, just hours before the presentation was due to be made, Jack died.
This tale may have a rather sad ending, but it made me think about those companies that will be ‘lucky’ enough to hold on to a Big Four audit in the wake of Sarbanes-Oxley.
As we reported in Accountancy Age last week, the Big Four have started resigning a much greater number of audits in the US, as their resources strain under the massively increased workload the Act requires.
As a result, those firms considered a more risky proposition, and likely to require far more work to be done, are falling by the wayside.
So far this cull has been restricted to the US, but increasingly it looks like there could also be an issue on this side of the Atlantic. UK companies with a dual listing in the US will also have to cope with Sarbanes-Oxley, while there is the not insignificant matter of international financial reporting standards from next year, plus the appearance of the operating and financial review in April.
All of these issues will mean a big rise in auditors’ workload and, given that it takes up to four years to get a new recruit up to speed, staff shortages won’t be solved immediately. In the meantime, firms look like they will be auditing a reduced number of clients.
Now given the strong commercial pressure that the Big Four face, they are unlikely to tolerate a big drop in audit revenues despite having fewer clients.
And while nobody is expecting auditors to do a lot more work for the same price, those fortunate enough to avoid the cull may not feel so lucky when they get their next audit bill.
Paul Grant edits the audit page.
UK senior partner Phil Verity has been elected for a second term at Mazars
An audit partner has been appointed at Grant Thornton in its North West offices
KPMG has been appointed with “immediate” effect as the auditor of Dorcaster
The audit for Ibstock will be taken over by Deloitte following a competitive tender process