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Public dialogue into auditor's role must be intensified, say participants

21 Sep 2009

The lack of in-depth understanding among business owners, investors, managers, regulators and auditors about the current role of audit - and what form it should take in the future - was the main topic of discussion at an ACCA-hosted roundtable in Warsaw, Poland, on 14 September.
 
The event, entitled The Future of Audit After the Financial Crisis, featured representatives of stakeholders from the Polish audit profession, including the Ministry of Finance, Chamber of Auditors, Commission of Financial Supervision, Union of Polish Banks, Polish Institute of Directors, Polish Confederation of Private Employers Lewiatan, as well as individuals from major audit firms.

With the economic downturn having contributed to an increasing public interest in the work of auditors, the event was predictably lively, with roundtable participants agreeing on the following key points:

• Auditors cannot be solely blamed for the financial crisis, as the responsibility lies with accountants, managers, board members, investors and other stakeholders too. The auditor's role is not to predict the future but to ensure that companies' financial statements give a true and fair view of their performance over the previous 12 months. However, it is acknowledged that financial statements do include many assumptions about the future. 
• Currently there is a lack of understanding about the role of audit - an expectations gap between how the wider groups of stakeholders, managers and owners of companies perceive auditors, and what the actual role, function, and limitations of audit are. Companies often do not see the value added by auditors. Participants of the roundtable agreed that this first public debate was vital and that future discussions should be held, with all participants expressing a willingness for further cooperation.  
• Exemption from audit may not be a beneficial way to tackle administrative burdens. Increasing the current regulatory thresholds can actually lead to the potential for further corruption, bribery and money laundering.
• The quality of education and professional training of finance professionals is still very important in Poland and around the world, although tremendous progress has been made during the past 20 years. There is clearly a need for further research into such issues as the economics of audit, the perceived value of audit, and the way in which an audit is actually conducted.

'A strong audit function promotes trust and contributes to the working of efficient markets,' said Dr Steve Priddy, ACCA director of technical policy and research, who moderated the roundtable discussion.

'The economic crisis and resulting current economic conditions raise numerous challenges for the audit profession and its stakeholders. When economies throughout the world are shaken by corporate corruption scandals, it is important to reassess what the future of audit should be, and quite importantly, how its role in the economy will, and should be, understood by the wider society.'