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Less than one in five Australians support the idea of an audit-only firm despite global and local concerns over audit quality and market competition.
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Public’s audit perception in stark contrast to regulator concerns
09 May 2019
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9 minute read
A new survey of 1,000 Australian members of the public by the Chartered Accountants Australia and New Zealand (CA ANZ) and the Association of Chartered Certified Accountants (ACCA) shows that 35 per cent of all respondents believe there should be no restrictions on audit firms providing non-audit services.
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Just 18 per cent support the idea of an audit-only firm.
Further, the survey shows that nearly two-thirds of respondents would like the role of auditors to evolve to prevent corporate collapses, while 42 per cent want auditors to address more environmental and societal needs.
“The survey results are a sign that we are at an important crossroads as a profession,” Amir Ghandar, CA ANZ reporting and assurance leader, said.
“There is a new energy behind reimagining audit and technology is opening up new options to deliver what people are looking for in terms of confidence and reliable insights in a range of areas.
“While audits to date have focused on financial reporting, there is a demand for additional assurance over new risks investors and the public face, ranging from business viability to cyber security, climate change and even organisational culture.”
The survey, conducted in February, comes in contrast to developments in the UK audit market, which is currently facing recommendations that the big four undergo an operational split to ensure that the audit arms are under separate management from the rest of the firms’ business.
The UK’s Competition and Markets Authority has also called for mandatory joint audits, where big four firms will have to work alongside “challenger” audit firms to improve the quality of audits, as well as promote choice and competition.
Closer to home, the Joint Committee on Corporations and Financial Services said that it has expressed concerns about audit quality in Australia for “some years” now and believes there is merit for the Australian audit industry to undergo a “serious review”.
The Financial Reporting Council also recently delivered its assessment of the current state of auditor disciplinary functions, proposing that company auditors who are under investigation for poor audit quality should be named, and calling for ASIC to publish the results and identify firms in its audit inspection.
ASIC’s latest audit inspection also found that, in 24 per cent of the key audit areas reviewed, registered company auditors had not obtained reasonable assurance that the financial report was free of material misstatement.
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