Time for auditors to reveal themselves

Time for auditors to reveal themselves

PricewaterhouseCoopers took a pasting at the end of last week for its work at Northern Rock. Commentators concluded that the firm was to blame, should be under investigation and be chased out of town with a big stick.

gavin hinks

There appears to be no evidence of wrong doing in connection with Northern
Rock. But the grilling of partner Richard Sexton by the Commons Treasury select
committee revised some questions. Namely, what is the purpose of audit and how
best can auditors clarify what their task is when working with complex
institutions like banks?

Sexton was reasonably clear that his role was to provide comfort on the
financial statements. The audit was not about giving public testimony on the
strategy adopted by the bank and the risks involved. That was a job for
executives and internal auditors. Analysts themselves should have known what was
going on, though I don’t recall any of them raising the alarm.

It is a measure of the public misunderstanding of audit that fingers are so
readily pointed at auditors. But auditors are partly to blame. While many will
privately agree they have failed to communicate their responsibilities, there is
little evidence of anyone putting that right. If you want understanding, you
have to help the process and auditors have avoided publicity for too long.
That’s the real problem here.

uditors have been guilty of allowing people to think what they want. There’s
a certain professional timidity, disguised as client confidentiality, that
demands correcting.

If you really want auditors to deal with problems such as those at Northern
Rock, you have to redefine their role. Until the communication improves,
auditors can expect to remains everyone’s favourite whipping boy.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource