Trust in audit falling, claims Financial Reporting Council
Public trust and the effectiveness of audit is falling, according to a report by the Financial Reporting Council (FRC). The UK watchdog cited a number of reasons for these failures in their report titled ‘Developments in Audit 2018’; a study that aims to “drive the delivery of consistent, high-quality audit by UK firms, and address the risks that stand in the way of that.”
The key area of concern cited by the FRC is confidence in the profession. High profile corporate failures such as the collapse of Carillion and the intense scrutiny that followed have uncovered inconsistencies in the way audits are being delivered. The report also criticised lack of competition of the audit sector due to the dominance of the ‘Big Four’ audit firms – Pricewaterhouse (PwC), Deloitte, KPMG and EY.
Mike Suffield, Director of Audit Quality at the FRC, claimed that with a renewed focus on addressing quality issues in audit, smaller firms will be able to compete with the big global firms on the largest contracts, and that many are already capable of taking on audits with FTSE 350 companies. As it stands, problems with insufficient challenge of management and professional scepticism, inadequate group audit oversight and a lack of consistency are just a few of the quality issues that are hindering firms from competing with the ‘Big Four’.
Five Main Pillars of the FRC:
Reynolds Packaging Group, a global manufacturer and supplier of consumer packaging products, identified a need for improved quality in their audits, and with the help of Pentana Audit, have managed to achieve some fantastic results. The value of the audit quality control in Pentana is described as “priceless” by Director of Internal Audit, Christina Leighton, who highlights the standardised audit method, training, ease of review and built-in restrictions to avoid incomplete or inaccurate reports as some of the key benefits of the software.
“Implementing one solution in Pentana across the entire Holding Company allowed us to make the processes consistent and resulted in more accurate, timely and efficient reporting.”
Multinational telecommunications company BT Group Plc use Pentana Audit to meet the standards expected by the FRC. Mark Snook, Senior IT Internal Auditor, states that the software helps define their audit work by structuring audits by business objective, linking that objective to the associated risks, identifying the mitigating controls and underpinning the entire process with the right documentation.
“This structure is really important to us as it helps us achieve that consistency of approach which is crucial for our department.”
Ideagen’s audit management solution, Pentana Audit, has been designed to improve the quality and consistency of audits from start to finish, with a structured workflow, automatic report production and standard risk and control libraries. Ideagen’s software offers a complete solution from planning to sign-off, and many of our clients have found it invaluable in increasing their overall audit quality.
To discover how Pentana Audit can help you improve audit efficiency and quality, contact Ideagen today.