Working in audit is a dull repetitive business, many say. We don’t think so.
The ethical dimensions to being an auditor alone are proving the source of
In the last three weeks, regulators at the Financial Reporting Council have
moved to provoke heated discussion over two big issues the changing model for
audit and exactly what auditors should be disclosing.
On the first issue the FRC has warned that it is looking very closely at the
development of internal/external audit models where a single firm provides
elements for both sets of work. This became a headline-grabbing issue once
Rentokil signed a new deal with KPMG.
This week we learn the Department of Business, Innovation and Skills, on the
advice of the FRC, is looking closely at what relationships companies should
declare with their auditors when they report in their accounts. What it means is
that companies may have to disclose an entire web of contacts linked to
directors in the not so distant future.
Interestingly this all comes in the final days of Paul Boyle, as chief
executive of the FRC. He departs having been its first boss and having had to
set the tone for those that followed making sure that the regulator made its
The FRC has indeed acquired a presence in international debate, especially in
the wake of the credit crunch, and the body as a whole has become greater than
the sum of its parts. The regulation of accounting and financial reporting bears
little resemblance to its fragmented and slightly clubby former self.
The FRC has managed to rattle cages. It has challenged assumptions and
brought much greater focus to some key debates within the profession. It has
become respected both in the profession and in government, though not
necessarily liked by all.
And as Boyle points out, it has avoided disaster. Not as bizarre as you might
think as a boast, given the problems that have faced the Securities and Exchange
Commission in the US, criticised for not only failing to spot the crunch coming,
but also ignoring warnings about Bernard Madoff.
Many will ask about one big question though the audit market and whether
there is a new firm to compete with the Big Four. There isn’t.
Despite much talk, many meetings, speeches, statements and outspoken
intentions, the market remains dominated by the same four. Accountancy Age still
believes this is a far from ideal set of circumstances for the audit market and
that it would be in everybody’s interests if it was to change.
That remains a challenge and one which Boyle’s successor, Stephen Haddrill,
will have to face.
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