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 Cleary.
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 detail.
“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.
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 individually.
BDO Stoy Hayward managing partner Simon Michaels welcomed the move.
“[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.