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Watchdog reveals scathing report of smaller audit firms watch

    • Thread Starter


    Now, given the news on the proposed demise of the Audit Commission at http://www.bbc.co.uk/news/uk-politics-10970008 ... that gives about two years for the auditing industry to get its house in order?


    (It was the Audit Commission that picked up on the "homes for votes" scandal that embroiled Shirley Porter of Westminster Council in the late 1980s - http://news.bbc.co.uk/1/hi/3867387.stm)
    • Thread Starter

    It's not just the small ones either:


    Key overall findings of the AIU’s inspections of the four largest firms

    * The firms have policies and procedures in place to support audit quality that are generally appropriate to their size and the nature of their client base.
    * Despite the quality of the firms’ policies and procedures, the number of audits assessed by the AIU as requiring significant improvement remains too high.
    * The findings suggest that the firms are not always applying:
    o Their procedures consistently on all aspects of individual audits;
    o Sufficient professional scepticism in relation to key audit judgments.
    * Firms need to embrace more fully the principles underlying the Ethical Standards and, in particular, accept that non-audit services should not be provided to audit clients where appropriate safeguards do not exist.

    Did I hear anyone say "Conflict of interest" or "Enron"?



    "I think that one of the obvious systemic causes of the Enron scandal is our legal and regulatory structure. First, current laws and SEC regulations allow firms like Arthur Andersen to provide consulting services to a company and then turn around and provide the audited report about the financial results of these consulting activities. This is an obvious conflict of interest that is built into our legal structure. "
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