For a start, as the audit threshold has risen auditors and companies have had to rethink the rationale behind the audit process. Many companies below the threshold will ditch the audit but other commercial concerns are discovering an interest in a process which provides assurance to shareholders and others.
The audit is evolving as a result of competitive pressure more than legislative drivers. A quality audit is increasingly being seen as one that meets not only the expectation of the client but other stakeholders.
At the same time, audit is going beyond its traditional Companies Act remit. More trade bodies are looking around for independent third party assurance on whether its members are complying with a whole host of statutory quasi-statutory regulation. These rules are often designed to protect the public from financial or other loss. It seems certain this special report market is set to grow over the next few years presenting an opportunity for all sizes of audit firms.
Against this background, a new publication from the English ICA’s Audit & Assurance Faculty* is challenging auditors to re-think what they do and how they do it. To achieve high standards with maximum efficiency, firms must look beyond audit methodology to wider issues such as the quality of their people, the culture within the firm and the depth of their understanding of clients’ businesses. They must ensure the behaviour of their people changes so as to achieve benefits such as improved quality and greater efficiency.
To be successful auditors must be prepared to put at least as much effort into managing the ‘change process’ as determining the changes to be made.
For the last few years the audit and assurance profession has been free of the sort of scandals which haunted it in the early part of the 1990s.
However, most auditors you talk to are haunted by the fear that an economic downturn may expose some corporate wreckage which will call into question the standard of their work and professional judgement. The possibility of such accusations makes it all the more important that auditors are seen to be adopting best practice and changing their work to match the business realities of the 21st century.
* Towards Better Auditing is published at £10 and available from the English ICA.
- Peter Williams is a director of Kata publishing and a freelance journalist.
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