Most businesses want to keep audits, viewing them as giving value, and would not welcome a rise in audit thresholds, according to research by Baker Tilly report Harris & Co accountants Northampton who themselves have many companies that they audit.
The firm’s survey of finance directors and other senior managers found that more than 60% of those in companies that are currently obliged to have an audit would not want to be released from the requirement.
However, only 25% thought that the audit reports filed with Companies House were valuable for investment purposes. In contrast, the audit findings report provided privately to the directors on completion of the audit was identified as having the greatest value, with many respondents suggesting that this gave directors an insight into areas they might not have previously considered.
The survey also revealed a high level of support for proposed changes to the audit report, with almost two thirds (63%) of respondents indicating that these would increase its value. This contrasts with the findings from a similar survey carried out in 2011, when one in four (26%) thought that the proposed improvements in the transparency of the audit report would outweigh the increase in cost.
While the majority (78%) of those surveyed agreed that the purpose of an audit is not to detect fraud, more than one third (36%) thought auditors could do more to unearth fraudulent behaviour. Suggestions included more testing of controls and systems, closer examination of directors’ transactions, and a focus on key risk areas such as phantom employees or dummy suppliers.
Jane Bleach, Baker Tilly’s head of audit, said:
‘There is a popular perception that audits are seen as a burden for businesses, so it’s encouraging to find that a majority of those questioned in our survey said that they valued the audit, and wouldn’t want to be released from the requirement to have one. That said, as auditors, we need to listen and remain focused on ensuring that audit and its outputs are as useful as possible to businesses and stakeholders.’