Going for a distinctive small audit

Article Abstract:

The 'GoingConcern' exposure draft issued by the Auditing Practices Board imposes on auditors the responsibility of identifying material matters that may discredit directors' claim that the company is a going concern. This undertaking requiresa review of the soundness of procedures taken by directors in rationalizing their view. Because this ruling may burden small company directors who are not well-versed on such assessment matters, there are suggestions to apply the stricter going-concern requirements only to larger companies. However, this proposal may only prevent auditors of small companies from using the going-concern audit in serving their small clients and their stakeholders. A mini-survey of five directors, four bankers and three small-business auditors reinforce this view. All respondents agree that such going-concern procedures can facilitate closer cooperation among directors, bankers and auditors in assessing the future of the company.

Small business, Going concern (Accounting), Going concern, Auditing Practices Committee

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Is the risk-driven audit too risky?

Article Abstract:

New audit approaches that focus on risk assessment may themselves pose risks to audit quality. Risk-driven auditing is based on the view that auditing is a process of risk assessment and management, and entails the analysis of the business, business process and managerial control. This practice could be harmful if auditing is seen as a learning process whereby the auditor learns how financial statements serve as indicators of business performance. One risk of risk-driven audits is that companies will not gain a good understanding of the relationships among managerial business, managerial control and financial statement risk. Another risk is that companies will fail to appreciate the value of contacts with the transactions, basic records and controls of the business as sources of knowledge in their own right.

Risk assessment, Evaluation, Risk (Economics), Auditing, Practice

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Megafirm mergers - can we Offaud them?

Article Abstract:

The recent number of large mergers in the accounting profession, leading to the creation of mega-firms, has brought out many of the problems in the accountancy profession, particularly in the area of accountability. The problem of mega-firm accountability is exacerbated by the UK government's decision to regulate firms rather than individuals. Problems with regulation and the impact of mega-firms on the profession can best be addressed by the creation of an Office for Auditing (Offaud), similar to the Office of Telecommunications and the Office of Gas Supply, that would be concerned with the performance and efficient use of resources of the accounting profession.

United Kingdom, Acquisitions and mergers, Accounting, Great Britain

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