The interviews

Anthony Cates

The audit model and the profession 

Financial statements no longer give insight into companies’ changing fortunes. So auditors must evolve themselves in order to remain relevant as a profession.
  • Do auditors have the capability to give anything more than a binary pass or fail audit opinion? Is the profession sufficiently sophisticated to deliver a more narrative-based opinion? Close Open
    The issue is, where is the demand? How do you write the report in a way that can go to investors? That's where there is a risk averseness in the profession, and management might not want that. For example, I could be auditing a FTSE 100 company and the audit chairman could say how would you rate my controls out of ten. Do I see demand for this? I have not yet. These things would be useful. The quality of earnings – how many one-offs are in the earnings numbers? You don't see that in the report and accounts.
  • Does the common compliance-based training that auditors around the world receive encourage them to take a 'tick-the-box' approach, rather than the more inquisitorial approach that is required? Close Open
    I think the best auditors are making judgments, giving insights not because of compliance training but their nose, the way they understand the business. The issue is that we have a common set of auditing standards around the world. You want the auditors in the US and China to be working to the same standard as the ones in London and Amsterdam. And then the regulators are reinforcing that. They think they're moving up the base level. But the best auditors are those who can sniff out the issues. Driving the training in that way means you may lose the people who are more maverick.
  • Is there merit in extending the audit beyond the financial statements or even the annual report? If so, what would you suggest? Who wants this? Who will pay for it? Close Open
    Investors only get concerned about the quality of an audit when a business fails. But actually they could have a dialogue with the auditors beforehand to get an understanding of what the issues are. 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 is Head of Audit for KPMG’s UK member firm and for Europe, Middle East and Africa (EMA Region). He joined the firm in 1987, qualified as a Chartered Accountant in 1990 and was made a Partner in 1998. Tony spent a year on secondment to KPMG in Kuwait in the 1990s and has subsequently held a number of senior leadership roles in the UK firm as well as serving a wide range of clients from owner-managed businesses through to FTSE 100 clients across a number of sectors.

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