The job of an auditor is to review a company’s financial statements and internal procedures, ensuring that businesses are reporting information on profits and financial risks accurately and transparently. However, in recent years, auditors in the UK have been accused of conflicts of interests, poor standards and a failure to show professional scepticism. A number of large businesses have recently collapsed due to risks being taken. If auditors had flagged these risks and forced companies to act more prudently, their collapse may have been prevented.
The government's approach has a half-hearted and lop-sided feel to it. Lessons from… recent company failures have been ignored.
The Institute of Chartered Accountants in England and Wales
Comment on Government response to audit and corporate governance white paper
Reform of audit has already been delayed for far too long and it is time the government delivered these reforms by publishing the audit reform bill it promised in the Queen’s Speech over a year ago.
Chartered Institute of Internal Auditors
Financial Times
Financial transparency and accountability are crucial for economic stability which UK businesses need to thrive and grow. A healthy economy is also dependent on job and pension security, effective use of taxpayer money and public trust in business which are placed in jeopardy when companies collapse.
The UK government published a white paper in 2021 discussing how to restore trust in the broken audit sector. However, according to the Financial Times, the government looks set to drop audit reform from its legislative programme for 2023-24.
In response to this, The Audit Reform Lab has formed and will be launching new research in a number of areas: Big 4 pay and performance; corporate stability; auditing emissions; public accountability; and reimagining the purpose of audit.
Led by Professor Adam Leaver, with support from Dr Daniel Tischer, Dr James Brackley and Thejo Jose, The Audit Reform Lab puts audit failure under the microscope, offering reform recommendations to address the UK’s urgent transparency and accountability problems.