Our lead story reveals that the UK’s financial reporting watchdog wants more
transparency and information from auditors so that potential clients have a
better basis for comparability.
Auditors have made some progress on revealing what they do. For the big
firms, the first great step for audit kind was publishing annual reports as the
quid pro for LLP status. Of course, KPMG recognised much earlier that times were
changing and published its first set of results. This was seen as essential in
the changing world.
What the FRC wants is more public information about how the big firms
maintain audit quality. The firms should not be afraid of this. They should see
themselves in the vanguard of developing the sector and embrace the change.
Some will resist. Some will produce arguments for why things should stay as
they are, or why publishing such information will produce no great improvement
for clients – perhaps only more confusion. Such a stance will entail the
advisers on transparency arguing against being more transparent themselves – not
a happy situation for the audit profession.
Expect the mid-tier firms to enthusiastically go with the FRC’s request as
early as they can. They will see they have nothing to lose. They might also see
a competitive advantage in being first to reveal all.
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