PracticeAuditQuestions of trust which must be resolved

Questions of trust which must be resolved

Do we trust auditors to remain independent?

The whistle has blown and the ball is now in play. Tuesday’s release of the
Auditing Practices Board’s consultation paper on the potential conflict between
audit and non-audit services signals the start of what we expect to be a fierce
debate but one, which everyone acknowledges, that has been played out time and
time and time again. It was first reported in this publication’s launch issue in
1969.

So what’s new this time round? In one camp there seems to be a voice for
greater transparency. This argument advocates that audit committees produce
explanations as to why they have selected their auditor to undertake non-audit
work. Another argument is that there should be more details about what auditors
actually do when they are doing non-audit work.

But the issue comes down to one word. Trust. Do we trust auditors to remain
independent? Do we trust shareholders to make the right decisions? Do we trust
profit-driven companies to stand on principle? And here’s the wild card: is
there still enough trust left to once and for all resolve the issue?

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