Audit has a sharpened focus
Despite its name, audit is only one of the commission's statutory functions. It also has important statutory responsibilities in relation to national 'value for money' studies, performance information and now inspection.
Audit is not a ‘Cinderella’ function. ‘Sharpening the focus of audit’ is first of the five strategic themes, a key aim of which was to engage more with the wider accountancy profession.
We have done so through work with the Auditing Practices Board and the creation of an independent technical advisory group, to act as an expert panel on technical accounting and auditing issues. Our first ever technical strategy has been well received by the profession and other key stakeholders.
Above all, the commission’s new code of audit practice, which underpins its local audit regime and was approved by parliament in March 2000, reshapes local audits, putting renewed emphasis on auditors’ traditional responsibilities in relation to the accounts and financial aspects of corporate governance work.
Reflecting the wider scope of public audit, it also gives auditors responsibilities in relation to use of resources, performance information and best value.
But auditors’ work in these areas is about assurance – not consultancy.
The commission imposes strict SEC-style rules on auditor independence and the new code – with emphasis on the risk-based approach to audit planning – will sharpen the distinction between audit and other work. Emphasis on risk also gives auditors greater flexibility to tailor audit work to the circumstances of individual audited bodies, reflecting the commission’s recognition that a one-size audit does not fit all.
The commission is committed to the principle of contestability within its audit regime and is engaged in the biggest market testing exercise it has ever run – exposing some Pounds 32m worth of audits to open competition.
It remains to be seen what the Sharman review will say about public audit arrangements, but we should not forget the commission has been through two external reviews of how it discharges its functions in the form of the select committee enquiry and the government’s own fundamental five-yearly review. The reviews concluded the commission is a well-respected body, widely regarded as doing a difficult task well. Not a bad judgement for any regulatory body.
- Martin Evans is director of audit policy and appointments at the Audit Commission.