An audit firm head fears new high-level
Audit Inspection Unit (AIU) reports on major firms could lead to
greater economic uncertainty in the UK.

The UK Financial Reporting Council is due to begin publishing
separate high-level inspection reports on seven major firms in
mid-December. Grant Thornton UK chief executive Michael Cleary said
any criticism of an accounting firm by the AIU needs to be
considered in the context of good audit quality overall.

“At this critical point of time in the economic position of the
UK, the danger is that the AIU reports may be misinterpreted and
there’s so much uncertainty that any criticism of auditors may be
taken out of all context [due to the credit crunch],” warned

Commentators have suggested that firm-specific reports would
better serve the public interest and point to the Public Company
Accounting Oversight Board in the US, which publishes parts of its
reports on individual audit firms.

RSM Bentley Jennison national managing partner Tony Stockdale
said while anything that improved the quality of work undertaken
had, in principle, to be a good thing, the devil was in the

“If changes such as this are delivered in a way which are a
negative, rather than a positive, it won’t have the beneficial
effect that it could do. The focus of something like this should be
to improve matters – not to be a firm bashing or audit bashing
exercise,” he said.

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PKF senior partner Ian Mills said while he supported an increase
in transparency, the reports distort the playing field when
comparing larger firms subject to the AIU review to smaller firms
that are not and do not have a public report issued on them

BDO Stoy Hayward managing partner Simon Michaels welcomed the

“[The reports] allow audit committees to take more informed
decisions about auditor appointments; it gives end users greater
confidence and enhances the reputation of the profession more
generally. I think there are a lot of good things [in them] for the
profession and it provides an external perspective in regards to
individual firms,” he said.

Nicholas Moody