PracticeAuditManagement briefing: Audit choice

Management briefing: Audit choice

Audit has not been under so much scrutiny for many years. Massive changes are in the air and some have already started to surface. Ever since the dramatic fallout from the Enron and WorldCom scandals, governments across the globe have been looking for ways to avoid similar calamitous situations.

Editorial by Paul Grant

Audit has not been under so much scrutiny for many years. Massive changes are
in the air and some have already started to surface. Ever since the dramatic
fallout from the Enron and WorldCom scandals, governments across the globe have
been looking for ways to avoid similar calamitous situations.

To download the briefing as a pdf
click
here
, or simply read it chapter by chapter below.

Of course, when you start delving into a topic as tricky and deep as this,
you tend to throw up more questions than answers, and this is the unenviable
predicament we find ourselves in today.

Company owners want greater reassurance that the reports they are receiving
from the auditor are reliable and informative. They want those providing
assurance to be accountable for the work they carry out and are concerned that
changes in the standard-setting world and regulation may erode the confidence
they can place in audit reports.

On the other side of the argument, audit firms want greater protection from
catastrophic claims in order to avoid a similar fate to that of Arthur Andersen.
They have already been granted permission to seek limited liability agreements
with their clients in the UK via the Companies Act and are now looking to push
this on a European and global scale.

The major problem here is that neither argument is particularly compatible
with the other, which will no doubt lead to years of claim and counter claim
from the various sides. Running parallel to this is the debate on whether there
is enough choice in the audit market. Having only four truly global firms leaves
the market exposed to crippling problems should one disappear. No one wants
regulatory intervention to resolve the problem, and suggestions on what exactly
to do about the situation are short in supply. Cue even more debate on the
matter.

And stuck in the middle of all this is the company that requires an audit. It
may seem that they have little say in the matter, but in the end they are the
ones that have the ultimate power of hiring and firing the auditor.

How best to exercise this power in such turbulent times is a crucial skill to
master, and one we hope to be able to shed light on in this briefing.

Click on the headlines below to read the Audit Choice management
briefing chapter by chapter…

Competition and choice: Limited Options

Audit quality: A dangerous path

Big Four and beyond: Is bigger better?

Making the most of audit: True and
through

Changing auditors: Switch hitch

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