Only 25% of public know the role of an auditor

Half of the UK public (48%) believe it is auditors who are responsible for avoiding company failures, but only a quarter can accurately identify what an auditor does, according to a survey by ACCA which says there is an urgent need for a wider debate about the role of accountants

The association’s poll of 1,000 individuals found that 41% expected auditors to always detect and report any fraud, while two thirds (65%) believe audit should evolve to prevent company failures.

Andrew Gambier, ACCA’s head of audit and assurance, believes the findings make clarity in auditing essential.

He said: ‘The profession has long spoken about the expectation gap in audit, and our research shows it has failed to close that gap. It is clear that further education on the auditor’s role is required, backed by a proactive approach by the profession to address the public’s concern.

‘Our research shows the urgent need for an open dialogue involving the profession, stakeholders and the public to understand what kind of audit future the public expects. The public sees audit as part of the solution, so we must work together to address their legitimate concerns about audit.’

The findings form part of the preliminary results from a global research initiative titled Closing the expectation gap in audit which will be published in full in early 2019, and will cover global public attitudes on the role and responsibility of the audit profession.

ACCA said it released the UK research early to inform the broader discussion around the audit profession here in the UK, at time where the sector is undergoing three major reviews (Sir John Kingman’s review of the sector’s regulator, the Competition and Markets Authority’s review at the request of Business Secretary Greg Clark and the Business, Energy and Industrial Strategy (BEIS) select committee’s inquiry announced last week.

ACCA has expressed concern about many of the potential measures raised in the CMA’s invitation to comment, which it says may have unintended or unwanted adverse consequences.

Gambier said: ‘ACCA is concerned at the pace of the CMA review, and also that the CMA may not have fully explored previous recommendations for change in the context of the Competition Commission’s review of 2011–2014. The CMA has privileged access to these findings, and should exploit this to develop more workable proposals.

‘We recommend a two-year cooling off period for auditors following the end of an audit, before any further form of consulting service is undertaken. Moreover, we also advise the CMA to consider a prohibition on management from firing their auditors, allowing them to complete their term and to maintain independence.’

In response to the Kingman review, ACCA recommends more clearly defining the FRC’s scope and remit, to prioritise its role as the competent authority for audits of public interest entities. It wants the FRC board to refresh its membership to include stronger links with other UK regulatory bodies, including the Financial Conduct Authority and The Pensions Regulator.

Report by Pat Sweet

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