2020 must be year of audit reform
With the audit profession under fierce scrutiny and the regulator in flux, it is critical to move forward with the creation of the replacement audit watchdog to restore confidence in the audit profession, argues Scott Henderson, CEO of ABGI
23 January 2020
As we enter a new decade, many within the accounting profession and the wider corporate world will be closely monitoring progress on reforming the UK audit industry.
Is 2020 set to be the year we finally see significant changes to the rules around auditing? This question was the subject of an independent review by Sir Donald Brydon, former chair of the London Stock Exchange.
Central to this review was the need to determine whether the audit process should be widened beyond simply checking that accounts are in order to being tasked with detecting, and even blowing the whistle, on fraudulent activity.
The 135-page Brydon report was published in December with 46 separate recommendations on how to improve audit quality and effectiveness. The first suggestion was to redefine the purpose of audit, namely ‘to help establish and maintain deserved confidence in a company, in its directors and in the information for which they have responsibility to report, including the financial statements’.
It is easy to blame auditors for company failurers, however, I tend to agree with Sir Donald, who has said previously ‘it is not auditors that cause companies to fail, that’s the result of the actions of directors’.
Article originally published on Accountancy Daily