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Through collaboration, auditors, audit committees and business leaders can help to ensure that strong organisational culture allied to a desire to communicate accurately will continue to boost the perception of audit reports as a valuable tool for current and future investors.
“It is essential that audit firms have a culture committed to delivering consistent and rigorous audit quality across the firm.” These opening remarks come from the Financial Reporting Council’s (FRC) recently released Audit Quality Thematic Review.
In a time in which the role of auditors is increasingly moving away from pure number-crunching and towards a more holistic view of business which encompasses risk management, culture and governance, the thematic review provides some interesting pointers not just for auditors but also for business leaders. Areas such as the monitoring of quality control systems and the role played by audit committees are highlighted, as are review methodologies and the importance of undertaking root cause analysis should areas of concern come to light.
The changing role of auditors brings some interesting challenges. In order to provide a more holistic and rounded viewpoint they have to become more familiar with the organisation at many levels, yet at the same time their independent role requires them to remain as outside observers rather than internal partners. This in turn places additional responsibility on the audit committee which the report says “can make an important contribution in building investor confidence in the quality of the external audit and ultimately in the credibility of the financial statements.”
Once concerned simply with numbers, annual reports have evolved to provide valuable insights not only into the current conduct the profitability of a business but also its anticipated prospects. Through collaboration, auditors, audit committees and business leaders can help to ensure that strong organisational culture allied to a desire to communicate accurately will continue to boost the perception of audit reports as a valuable tool for current and future investors.