A study commissioned by Mazars which canvassed public opinion on the UK economy and the audit industry found that just 17% of 2,000 respondents trust the current audit system.

Due to the high profile nature of the collapse of construction company Carillion in January of 2018 and the following scrutiny of its auditors, the study found that the public has a real interest in ‘an audit system that makes our economy stronger through improved transparency and accountability, and is unwilling to accept high profile corporate failures as the status quo’.

The study found that nearly two-thirds (62%) of respondents do not trust the current audit system to provide independent and accurate assessments of a company’s financial position.

In addition, nearly three-quarters (72%) of respondents supported the introduction of joint audit as a solution to the accounting scandals and corporate failures in recent years.

One of the key proposals for encouraging reform in the UK audit market in the UK’s Competition and Markets Authority’s (CMA) review of the audit industry was to introduce a system of joint audit.

This proposed reform received a mixed response from members of the profession. While Mazars was a strong supporter of this proposal, a number of stakeholders suggested that this could reinforce the notion that it is only the Big Four that is capable of conducting the audit of highly complex, multi-national businesses with the mid-tier firm involved in the joint audit seen as secondary to them.

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By GlobalData

In July, the now chair of the UK’s Financial Reporting Council (FRC) Simon Dingemans said that he was ‘not convinced’ that joint audit was the answer to reforming audit in the UK.

Mazars global head of audit and partner David Herbinet said: “We have long believed that the public has a real interest in an audit system that makes our economy stronger through improved transparency and accountability, and our research only strengthens this belief. High profile company collapses are becoming all too common, and impact hard-working people who understandably have grave concerns and are now demanding action.

“There is insufficient choice and resilience in the audit market,” Herbinet continued. “Substantial reform is now critical to the sustainable success of our largest companies and the wider economy. Nearly three out of every four members of the public (72%) support the introduction of mandatory joint audit as a remedy, and we see this particular reform as a major opportunity to create an even playing field for challenger firms to compete more fairly in the large corporate market, in which 99% of the audit fees of FTSE 350 companies are currently paid to just four firms. A diverse market is vital for audit quality and for the overall functioning of the economy.

“The CMA has produced a very effective range of measures to create a genuinely competitive audit market that addresses the needs of society. This represents the clearest opportunity in decades for real change.  It’s now time to maintain momentum and pursue brave solutions.”

While there is an appetite for reform in the UK audit industry, Jon Kingman who led a review into the FRC last week, wrote to Rachel Reaves, chair of the Business, Energy and Industrial Strategy select committee to express his concern of ‘letting the FRC drift on’.