Auditor Inadequacy: Is the UK Too Light On Its Standards

Throughout the years, different complexities have arisen out of the United Kingdom’s storied accounting industry as businesses try to understand the system and its implications. From logistical complexities that are outlined by mental acrobatics to ironing out financial systems that are outlined with all sorts of loopholes, it’s no secret that handling accounting-related issues in the UK can be quite complex. While it may be clear that the UK’s accounting industry continues to face various hurdles, there’s one recurring topic of discussion that is always whispered about in the accounting landscape: how far should the role of auditors go beyond that of regular accountants? Auditors and accountancy— what’s the problem? One of the problems most commonly discussed among those in accounting is the rigorous standards laid out during routine or surprise audits. Although it may be easy to see why audits are mandatory and should be prepared for, a cause for concern has recently loomed over the competency of those conducting the process. It wasn’t too long ago that one of Britain’s large-scale facility management companies unexpectedly closed up shop and let go of 43,000 employees as it collapsed due to bouts of financial mismanagement and inept audits. After months of investigation, members of parliament had criticised the firm responsible for conducting the audit as the inadequacy or inexperience of the assigned professional themselves— which eventually led to the collapse of one of Britain’s biggest companies. The role of an auditor bears significant merit because these professionals are responsible for overseeing the financial health of a company. Given the impact they can make in ways both good and bad, high standards are understandable. Due to the huge errors that could result in major inaccuracies, MPs are now calling for stricter standards and additional training, certification, and experience for practising auditors. Given the sheer impact of auditors on the overall financial health and longevity of any company—regardless of whether it’s big or small—there’s one clear message that gets louder by the day: reform is needed as soon as possible. A basis for reform in auditing— and how it entails being more than an accountant Although there are many potential problem points that raise a few concerns in terms of the efficiency and reliability that the modern auditor possesses, morality and refinement of skills are key. It’s clear that the future of many companies depends on auditors making objective and accurate decisions. Their responsibilities go far beyond keeping reports up-to-spec and thousands of employees on stable ground. Although it may seem quite far from now, taking the required steps towards ensuring that future accountants are competent for the job at hand can make a significant impact on future effectiveness, accuracy, and management for audits. Aside from ensuring that auditors uphold the concepts of transparency, communication, and independence at all times, however, MPs are currently championing the need for tougher regulations and a reinforced need for certification. Final words As more and more businesses continue to grow more dependent on the inherent value of fresh objective perspectives, it’s clear that competent auditors are more important than ever. Perhaps the CPA license alone will no longer suffice. Although we cannot exactly tell what is to come in the future, it’s safe to assume that the British Parliament, MP, and “Big Four” accounting and auditing firms are taking the necessary steps to ensure necessary changes are being made. Browse through our website for more accounting news in the UK.