Media Release

UK House of Lords releases report on audit future

The United Kingdom’s House of Lords has published a report overnight on the role and future of external audit.  The report Auditors: Market concentration and their role released by the Lords’ Economic Affairs Committee focused on the significant challenges that arose in the UK banking sector and its audits during the global financial crisis.

The Institute of Chartered Accountants in Australia's Executive General Manager, Lee White and the Head of Audit, Andrew Stringer, were invited last November as the only non-UK participants to give evidence to the Economic Affairs Committee, providing a non-European perspective on the role of audit and its potential future.

The report’s opening commentary reaffirms that the investment community, including government, “regard rigorous and reliable external audit as an essential underpinning of the business and the capital markets which finance it, in Britain and elsewhere.”

Mr White said that the profession welcomed the opportunity to engage and discuss the future direction of audit and continue the focus on improving audit quality.

“We are delighted that some of the Committee’s recommendations reflect the Institute’s proposals made in its submission to the Lords’ enquiry last year, particularly the emphasis on an increased role for audit committees and the potential of close to the event auditing,” said Mr White.

Many of the recommendations in the report are being placed into a detailed investigation by the UK Office of Fair Trading.

“Australia was at the periphery of the crisis but felt the waves of impact primarily through fragmentation of the global funding markets. Our banking and financial systems served us well during the crisis,” said Mr White.

The audit profession has come into the spotlight recently with reviews underway both in Australia and other overseas jurisdictions. The Institute has participated in consultations regarding the European Commission Green Paper Audit Policy: Lessons from the Crisis and Australian Treasury’s Audit Quality in Australia: A Strategic Review. 

The Institute’s role as a public interest body is to help achieve appropriate policy responses to the issues raised in the papers which may provide a blueprint for possible future reforms.

Article last Updated 31 March 2011