Audit in the headlines (again)

So, once again, the audit profession has hit the headlines and, once again, for the wrong reasons. 

The issue of audit quality has been an ongoing debate for several years and more so in the last couple of years given the financial crisis and the fact that the auditors of banks have come under severe criticism for their handling of their audits. 

The Big 4 have presided over the auditing profession for years and there have been lots of calls for there to be a ‘break up’ of this dominant position they hold to allow for more concentration of the audit profession; though time will inevitably tell if these attempts are going to be successful. 

Auditing throughout the world has come under fire of late but is this criticism warranted, or are auditors simply the ones to blame when things go horribly wrong? 

Continued...

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Comments
listerramjet's picture

its all very well

listerramjet | | Permalink

to suggest "Prudence should be reasserted as the guiding principle of audit", but its the wrong target, even if you hit the nail on the head in the next paragraph. Its IFRS that has done for prudence - not auditing. If IFRS says scrap prudence, and accounts have to be IFRS to show a true and fair view, then its hardly reasonable to blame the auditors for the death of prudence.

Risk based auditing

Jekyll and Hyde | | Permalink

I feel that that auditing profession (as a whole) is partly to blame, but also agree that the regulatory bodies should take the vast amount of blame, as it is the regulation that guides the individual auditors.

As a registered auditor I have been dismayed at the concept of risk based auditing, as this also helps the directors/other entities channel their fraud without it being detected by the auditors.

The main problem we face as a profession, both auditors and non audit assignments, is that it seems acceptable to the outside world and in fact some fellow professionals to reduce costs by stripping the admin/processing departments and then to reduce the work accordingly to fit into this unachieveable box. The conecpt to become automated and cut human quality control also threatens the audited accounts.

So when the directors of such companies are looking at auditors fees on a cost basis, rather than a quality basis, what do we all expect?

This also stems to all government organisations, who seem to critise that auditing profession, whilst ignoring their own organisational structural failings both past, but also present/future. One such organisation is H M Revenue & Customs.