Confidence in audit quality has โขunexpectedlyโ risen despite ongoing concernsโ about regulatory complexity and stalled reforms, accordingโ to a new report from theโฃ Chartered Institute of Internal Auditors (CPIA). The study reveals โคa โฃsurge in positive sentiment from โขfinance directors, equityโฃ investors, and audit committee chairs,โข evenโ as anxieties mount over โthe increasing burden of compliance.
the CPIA report,โฃ released today, โคindicates that 53 percent of finance directors, 60โ percent of equity investors, andโฃ 42 percent of audit committee chairs now citeโ increasingโ regulatory complexity as โฃa meaningfulโฃ risk to the auditโฃ profession. This reflects growing worries about โoverlappingโ obligations, especially for firmsโข auditing public interest entities (PIEs). Though,alongside this concern,confidence in โaudit โquality has demonstrably increased -โ a seemingly paradoxical finding.
The report notes a sense of “reform โfatigue” following years of consultations and draft legislation,โข with โคthe UK government’s proposed auditโ reforms yet to materialize. A Bill intendedโฃ toโค reformโ the Financial Reporting Council (FRC) into a new โคregulator wasโข unveiled โขin july 2024โ as part of the King’s Speech, butโข has seen no further movement. This legislative standstill prompted 66 MPs โand โLords to โurge the Prime Minister in September to โprioritize the long-delayed Audit Reform and Corporate Governance โBill.
“Proportionate reform isโ the best way to protect the gains we are โคseeing โฃwhile keeping the market โresilient for the UK’s largest, most economically vital companies,”โ stated Beale, as reported by City โA.M. The CPIA has pledged to collaborate withโค stakeholders andโค policymakers to translate the report’s โฃfindings into actionable steps.โ
Recent enforcement actions underscore the scrutiny facing the audit profession. โBDO was recently fined ยฃ6.5m โby the regulator forโข faking audit evidence, as reported by โข City A.M.,โ while Labor’s proposed ยฃ28bn wealth fund โฃhas also come under fresh โscrutiny.
