Accountancy Age has reported that:
Big Four firms could now face fines up to £10m for “seriously poor audit work”, as the Financial Reporting Council (FRC) has implemented recommendations from a 2017 sanctions review.
I guess we're meant to be impressed. I am not. I'd be happier if they did three things.
First, the FRS should stop trying to save its own skin with some too late, and probably meaningless, gestures that are supposed to represent reform.
Second, I'd like them to weed out bad audits and auditors, and not just make them unprofitable.
Third, I'd like them to actually make clear that audit is about ensuring companies are solvent when at present this fundamental requirement of UK law, implicit in the duty of an auditor to check that a company is able to pay a dividend without prejudicing its creditors, is ignored by the FRC.
Then I might take the FRC seriously. But right now it's just in spin mode, and that does not serve anyone's interests but its own.
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It’s a fast way to ensure the cost of an audit goes up for fast growth companies. It’s foolish to think auditors don’t consider the risk versus reward factor when pitching for an audit.
So what?
If we have to pay more for the assurance that is needed isn’t that the price of limited liability?
I don’t disagree but it clearly has implications for business. Clearly it’s a “cost” of doing business in the uk and the cost of limited liability, but if you are talking about the audit cost rising from 50k to 200k that’s clearly an impact in your margin
The issue is rarely with £50k audits
” I’d like them to weed out bad…auditors’
Your old firm KPMG did that didn’t they?
They told me if I stayed I would become a partner
I quit