55% believe auditors ‘could prevent company failures’, survey reveals

A survey of 11,000 people in 11 countries around the world by the Association of Chartered Certified Accountants (ACCA) has revealed their expectation that auditors should evolve to prevent company failures.

More than half of those questioned also believe auditors are responsible for avoiding company failures.

When asked to define the role of an auditor, 48% of respondents from Greece were able to do so. This was closely followed by the Czech Republic with 47%. It also showed that 25% of UK respondents answered correctly.

The survey was conducted in association with Chartered Accountants Australia and New Zealand (CAANZ). It comes at a time where the UK audit sector is undergoing unprecedented reviews, including scrutiny of both the role and remit of its soon-to-be reformed regulator, The Financial Reporting Council (FRC).

The Business Energy and Industrial Skills select committee’s report on the future of audit identifies the ‘delivery gap’ in audit.

ACCA believes that this is a “legitimate concern”, but pinpoints the expectation gap as the most “pertinent issue” facing the profession. It said the gap should be assessed in three components: the knowledge gap, the performance gap and the evolution gap. We then propose addressing each of these separately.

Maggie McGhee, executive director – governance at ACCA, said: “[The firm’s] survey highlights challenges for the accountancy profession, regulators and government in how to respond to public expectations of audit.

“The profession has long spoken about the expectation gap in audit, and our research highlights the failure of the gap to close. Globally, it is clear that further education on the auditor’s role is required, backed by a proactive approach from the profession to address public concern.”

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