BDO Calls for More Scientific Indicators in the Auditing Process
The auditing profession needs to be a lot more scientific than what it is now, BDO said in a statement today.
BDO has called for more ‘scientific’ indicators to measure the value of audit.
BDO is an accountancy and audit firm that is right behind the Big 4 firms that dominate the large UK market.
James Roberts, who is an audit partner at the firm, said in an interview to Accountancy magazine that the quality of an audit needs to be a lot more measurable than what is the case at present.
Roberts said that there should be a broader criteria used for assessing the work of auditors, including the criteria that is set by investors.
Roberts has also been reported to have said that the move could help in the creation of a fairer environment in which firms could have healthy competition among themselves to win the audits of large-listed companies.
Previously BDO had stressed that the dominance the Big 4 firms had in the market was certainly not healthy as it meant that it was very tough for small and medium sized entities to perform.
At the present, the Financial Reporting Council’s Audit Inspection Unit assesses the audits of the top audit firms. AIU’s analysis is narrative and directly comparing the quality of audits done by different firms is almost impossible.
Roberts also said in the interview that in case the Big 4 firms collapsed for some reason, “there was likely to be a ‘period of dislocation during which people can’t be available to other firms’.”
Roberts also said that “conflicts of interest” would be a problem if only the Big 4 firms remained on the scene.
Yesterday, an enquiry into the dominance of the Big 4 firms started at the House of Lords.