I also recently published an article called “The critical question in the audit debate”.
Since publication (and that was only two days ago!) we have heard that the FRC is going to undertake a further review on the scope of audit; the CMA has announced a market review; and Greg Clark, the BEIS Minister, has asked Sir John Kingman to add the audit procurement process to his remit.
Given the intense public scrutiny in recent months we welcome these opportunities to engage in an evidence-led debate on all these inter-related subjects.
I am particularly pleased to note that Theme 1 of the CMA’s audit review is ‘The Scope and Purpose of Audit’. While this may not form part of the CMA’s work the importance of this theme cannot be underestimated.
I highlighted in Monday’s article that this is the key question that needs to be addressed to ensure that audit remains fit for purpose in the 21st century.
I also welcome the following FRC commentary in its ‘Developments in Audit 2018’ paper, issued on Monday:
“We stated in our 2018/19 Strategy document that it is time to review the current statutory audit model and ask whether it can be made more effective.
“We also announced a review of the future of corporate reporting. We now believe it is sensible to take these projects forward together.
“This will be a major and wide-ranging review, drawing on input from a wide range of sources. It will consider how corporate reporting should evolve in the future to meet increased demands for information and the need for audit or assurance of that information.
“Key areas to be considered in relation to audit include the scope of audit; its relationship with future risk, viability and going concern; the impact of new technology.”
This hopefully will respond to my earlier point that the scope of audit needs to evolve to better meet the needs of stakeholders.
The debate has well and truly started, you can rest assured that we look forward to continuing to play a key role in shaping the audit of the future.
This article was originally published by ICAS.