There is a massive flaw in the Brydon Review report into the quality and effectiveness of audit. I will read and absorb the report: it is important for my own work. But nothing can overcome the fact that it ignored the fundamental fact that audit is only as good as the data being audited. And it never considered whether the accounts auditors in the UK are asked to look at are up to the job. This is apparent from the summary of the recommendations:
Nothing in there asks the obvious question, which is whether accounts prepared under International Financial Reporting Standard are capable of giving a true and fair view. I am not at all convinced that they can. In effect, then, the GIGO principle was ignored: no amount of audit changes the fact that if there is garbage going in then garbage will come out. And that's why Brydon will ultimately change nothing at all. It's a report that tinkers at the edges of the status quo when that status quo is broken. We need something much better than that.
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As a lay person in this field. I would assume (for larger companies at any rate) that that they bend over backwards to try and mask data which shows true profit by maximising that which increases their expenditure. Presumably they are also very coy about their tax liabilities and what they actually pay. They do not go into detail about the vast remuneration of top executives compared with the barely mentioned minimal rates of pay for the lowest employees. Bryden does make a token gesture with “external signals of concern” by which I would assume he means external factors like climate change – why this beating about the bush when we are facing extinction at worse or severe discomfort at least?
Actually Bill
a) They don’t maximise spend – they do want profit
b) They do disclose director pay in great detail
c) And in large companies we have some idea about tax – bit not much elsewhere
So, the assumptions don’t hold.
And Brydon looks outside the loop on climate
Who or what is Brydon? I suspect they are, as usual, ‘insiders’?
Therefore there is no prospect of a true analysis. Of course the ‘standards’ for auditing are not fit, who created them?
Also, there is no prospect, especially since last week, of any change, ‘our friends’ in the City will ensure that.
Now, Richard, as an educator in the field, will you create a proper profession?
I think creating a proper profession is asking a bit much
To hope that a proper critique of the profession can be created is not