Future audits may be tougher, says report

The audit process must change for audits to continue to benefit investors and stakeholders, says a new report that explores how KPMG leaders would bolster audits.

“The expectation of audit firms has changed and we, as a profession, are changing too,” says John Gordon, a managing partner at KPMG in Canada. “We’re focusing more and more on all the information that our clients and investors value.”

Read: IIROC’s top audit targets in 2014

“It’s not just about a pass [or] fail report…[we need] to provide investors with all of the insights needed to make the right investment decisions,” adds Larry Bradley, global head of audit at KPMG International.

The report explores the audit model and profession, along with the quality of current audits.

Top people interviewed across KPMG were consulted on what changed needed to be made to ensure company reviews capture relevant information.

Read: 10 tips for surviving compliance reviews

They shared the below thoughts:

“The biggest issue [auditors] face is the market’s lack of understanding of what we do,” says Jim Liddy, head of Audit at KPMG in the U.S. “Far too many people look [at] the audit as an insurance policy [or] as a guarantee against all” business risks facing a company.”

“Auditors have insights that aren’t getting outside the [companies they review],” says Tony Cates, head of Audit at KPMG in the U.K. “Many people say you can’t have auditors talking to investors, but there must be a way of communicating with investors that might be valuable to them and [that] would restore some trust in the audit process.”

“Currently, we say ‘yes’ or ‘no’ in audit opinion[s],” says Ingmar Rega, head of Audit at KPMG in Germany. “We could express our opinion[s] on many more things if…liability regime[s] and regulation[s] were different. It would be good for the capital markets to have additional [audit] statement[s]” on businesses.

Read:

10 U.S. regulatory predictions

Are regulators doing their jobs?

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.