United Kingdom

Details

  • Service: Audit
  • Type: Press release
  • Date: 06/02/2014

Audit profession must evolve and change to remain relevant 

The audit profession must evolve to remain relevant in today’s rapidly changing global economic environment. Without significant changes, the audit profession will miss a critical opportunity to add value and offer insight to investors and stakeholders. These necessary changes, along with pressing issues facing the audit profession today are explored in the Value of Audit: shaping the future of corporate reporting, a series of candid, personal interviews with 16 of KPMG’s audit leaders from around the world.

“As auditors, our primary product is based on a historical set of statutory financial statements,” said Larry Bradley, Global Head of Audit at KPMG. “However, stakeholders are clearly increasingly basing their decisions on information that resides outside of those statutory accounts.”

 

“Auditors have broader access to a company than almost any other entity or profession,” said Tony Cates, Head of Audit at KPMG in the UK. “Auditors have insights that are not getting outside the company. We are in a unique position to deliver more than a pass/fail audit report; to deliver insights to help shareholders better understand and engage with the companies that they own. That is why I am so passionate about the value we can add in our new, expanded audit reports in the UK.”

 

“The new UK audit report is a revolution - and similar proposals are now being considered globally by the International Auditing and Assurance Standards Board (IAASB) and by other national bodies. These are important steps towards better meeting the needs of users who want more insight into the audit that was performed,” said Tony Cates.

The Value of Audit explores this key issue and others that are impacting audits today including:


1.The audit model and profession.
2.Audit quality and value.
3.Relationships and 3rd party perception.

 

Each interview delves into the current reality facing the audit function and profession and asks interviewees to share their opinions on changes needed to help make the audit function more valuable. The following are a sampling of quotes from interviewees:

 

  • “Commitment to quality excellence is an imperative because without this there will be no trust and no profession.” Mark Vaessen, Global Head of IFRS Leader, KPMG International.
  • “Technology has greatly improved the efficiency of the audit. Looking into the medium term, we are very excited about how we can use data analytics to help identify problems that more traditional techniques might not.” Larry Leva, Global Vice-Chairman, Quality and Risk Management, KPMG International.
  • “Auditors need to understand a company’s management controls, and business strategy. But under existing standards we don’t need to mention these in our audit report or in any of our deliverables to the company. I think some kind of assurance or more detailed report on these would be helpful to the market.” Benny Liu, Head of Audit China and Hong Kong, KPMG in China.
  • “The biggest issue we face is a lack of understanding of what we do as auditors and how to interpret our audit opinion. Far too many people look on the audit as an insurance policy—a ‘guarantee’ against all things of a financial, risk, management or regulatory nature that may befall a company.” Jim Liddy, Head of Audit, KPMG in the US.
  • “Auditors have insights that are not getting outside the company. I can see many people saying you can’t have auditors talking to investors but there must be a way of communicating with investors that might be valuable to them and would restore some trust in the audit process.” Tony Cates, Head of Audit, KPMG in the UK and Regional Head of Audit, Europe, Middle East and Africa.
  • “Currently we say ‘yes’ or ‘no’ in an audit opinion. We could express our opinion on many more things if the liability regime and regulation were different. It would be good for the capital markets to have an additional statement on the robustness of the model and the risks and opportunities associated with the business model,” Ingmar Rega, Head of Audit, KPMG in Germany.
  • “Financial statements are like looking in the rear view mirror of a car. It can be interesting to learn about a place you’re never going to see again. But it’s not so relevant to where you are going.” John Gordon, Head of Audit, KPMG in Canada.

 

 For more information and for full interviews, please visit: kpmg.com/valueofaudit

 

Join the discussion on the Value of Audit by following us on Twitter @kpmg #valueofaudit or visit us on LinkedIn.

 

For more on the new audit reports in the UK, including a survey, please go to: http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Pages/audit-committees-auditors-reports.aspx

 

-ends-

 

Media enquiries to:


Mark Hamilton, KPMG Corporate Communications

020 7694 2687

 

About KPMG in the UK


KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of

£1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

 

About KPMG International


KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 155,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

The views and opinions expressed herein are the personal opinions of the interviewees and authors based on their personal experience working as Auditors in the industry and do not necessarily represent the views or opinions of KPMG International or any KPMG member firm.

 

 

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