EDITOR'S LETTER - Auditors are talking; are they listening?

The results of our reader survey into the auditing process make uncomfortable reading for audit firms large and small. The research did not exactly throw up wholesale condemnation of auditors (it would have been surprising and highly distressing if it had), but there are certainly no grounds for complacency. Quite simply, while audit firms try to restrain the decline in fees by extolling the virtues of the annual sign-off ritual, client FDs are not yet totally sold on the idea of an audit being a “value-adding business process”. More to the point, while they are often dissatisfied with the level of fees, they are also often less than pleased with the quality of service or the level of understanding of their business. Of particular concern – especially to the Big Five factories, which churn out hundreds of qualified accountants every year – is the fact that the quality of junior audit staff was found wanting by about half of respondents. The Big Five, and other audit firms, may wish to ignore this survey; they may argue that the thousands of readers who didn’t respond are obviously quite satisfied. But auditors simply can’t afford to pretend that everything is fine. They need to listen to the sound of less-than-content clients and cast a sharply critical eye over their service offering. In our interviews with the heads of audit at the Big Five (conducted before our survey results were known) we found a lot of soul-searching as to what auditing was all about, where auditing is going and where the value is. Surprisingly, there do not appear to be any serious conversations on such themes taking place with the owners of businesses – the institutional investors whose interests in auditing are only represented by proxy, via the management and the directors on the audit committee. So auditors also need to listen to investors to find out what they want from the process in terms of the scope of the audit, value-adding feedback and their expectations as to the level of assurance offered. If they don’t listen, they soon won’t have anyone to audit.