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September 24, 2023

Major Player in Audit Game Makes Unfortunate Audit Quality Word Choice

This week, the ICAEW held an Audit Quality Forum debate on Should auditors do more to make audit reports reliable?

Everyone sort of agreed that there's work to be done when it comes to audit quality but whatever work is done should be done slowly. Very, very slowly.

Case in point:

One of the key findings was that while the current audit continues to play a valuable assurance role, it does need to evolve to satisfy the demands of a world that is now far more complex than when the audit model was first conceived.

Companies, for instance, increasingly operate across borders in a complex web of global, national and subnational rules, Forbes points out, while capital markets evolve faster than accounting and auditing standards.

Yeah, yeah, that's nice.

Then we get to this part. The forbidden word should stand out to you immediately:

Melanie McLaren, executive director of governance, codes and standards at the Financial Reporting Council, pointed out that the UK was already ahead of the rest of the world with its new auditing regime, long form audit reports and the requirement for board directors to state that the annual reports and accounts are fair, balanced and understandable.

She suggested that changes to the audit should happen through evolution, rather than revolution. “There are a lot of initiatives at play and we need to be patient and see whether some of the things we are suggesting actually work. We have to put our very best efforts into landing the changes that we’ve already agreed.

“That shouldn’t stop us thinking about the things that might connect, but we do need to focus on the things that we’ve already got cooking.” [emphasis mine]

NEVER reference things you've got cooking in the context of anything related to accounting. Just don't do that. In fact, you shouldn't refer to things you have "up your sleeve" either because plenty of people already feel like regulators can be shady.

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