Cooling offConcerns have also been raised over a conflict of interest in firms selling consultancy services, while their auditing arms are carrying out an audit in the same company. This has prompted suggestions that a full structural or operational split could be the answer. In response to these reviews, ACCA has reiterated its long-held belief that there should be a two-year cooling off period, during which non-audit services could not be sold after an audit engagement has ended.
Coming cleanOutside of the reviews and reports, the general public have identified what they see as one answer to improving corporate reporting: good and clean audits. Despite audit being under growing and intense scrutiny, the public still regard it as part of the solution to what is perceived as unacceptable corporate behaviour.
The purpose of an audit is to ensure that financial statements give a holistic “true and fair view”, ensuring that material fraud is detected, and appropriate levels of professional scepticism are applied. ACCA recently collaborated with Chartered Accountants Australia and New Zealand to publish research called “Closing the Expectation Gap in Audit”, which explores why it is in the public interest to have an open dialogue between the profession, stakeholders, and the general public. The aim is to explore what kind of audit future the public expects. This survey of 11,000 members of the public in 11 different countries revealed that 55 per cent believe auditors are responsible for avoiding company failures, while 34 per cent expect auditors to always detect and report any fraud. A staggering 70 per cent believe audit should evolve to prevent company failures. The UK figures make an equally compelling case over the role of audit in terms of fraud detection, with 41 per cent expecting the auditor to always detect and report any fraud. It represents a disconnect between what the profession is delivering, and what the public expect.