Audit choice: a chance to shine

Last year was packed with debate and even disagreement about the adequacy of
competition and choice in the UK audit market.

At least all seem to agree that audit quality is of paramount importance. The
recent comments by Tomkin’s Ken Lever about the transparency of the Financial
Reporting Council’s Audit Inspection Unit reports add an extra dimension to this

The case for greater transparency in the accountancy profession is an issue
that we have consistently championed over the years.

We believe that clients and potential clients should be able to see for
themselves which firms really deliver the best audit work.

Many may prefer no change to the current reporting regime but I believe that
this position is indefensible and fails to recognise the real issues facing
finance directors and others when considering whether to change their auditors.

Audit quality plays a key role in the purchasing decision but in the absence
of information, they simply ‘stick with what they know’. Unfortunately, what
they know does not always mean they are getting the best.

What is needed is to find a way of providing more information to the market
about the quality and performance of individual audit firms.

In the US, the Public Company Accounting Oversight Board publishes
firm-specific reports. The US system may not be perfect, and the content of
their reports may not be ideal, but at least they publish something. The UK
should surely be able to work out a solution that suits our culture but embraces
greater transparency.

My own firm, somewhat unusually, volunteered for an inspection by the PCAOB
earlier this year just so we could get a publicly available report on our audit
quality and I was delighted that we were awarded a clean bill of health in terms
of audit engagement and quality control.

What better New Year’s resolution than for all in the profession and the FRC
to pay heed to the request of Ken Lever, and others, to provide greater
transparency and thus help in the creation of a more dynamic and competitive
audit market committed to the delivery of the highest quality audits.

Jeremy Newman is managing partner of BDO Stoy Hayward

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