Partner Article

Survey finds that majority of businesses value audit

It is almost certain that the Government will announce a rise in audit thresholds for businesses this year, but more than 60 per cent of those that are currently obliged to have an audit would not want to be released from the requirement, our latest survey has found.

The survey, which was conducted to understand businesses’ perception of audit and their reaction to proposed audit changes, found that although respondents valued the audit, just one quarter (25%) thought that the audit reports filed with Companies House were valuable for investment purposes.

The survey also revealed a surprising level of support for proposed changes to the audit report, with almost two thirds (63%) of respondents indicating that the changes would increase the value of the audit. This is a significantly higher proportion than in a similar survey carried out in 2011, in which only 26% thought that the proposed improvements in the transparency of the audit report would outweigh the inevitable increase in cost.

The audit findings report – which is provided privately to the directors on completion of the audit - was the audit product that was valued most highly by respondents, with many suggesting that the reports gave Directors an insight into areas they might not have previously considered.

The survey also sought the views of businesses about the auditors’ role in detecting fraud. Seventy-eight per cent of those surveyed agreed that the purpose of an audit is not to detect fraud, however, 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.

“The positive feeling expressed by respondents towards proposed changes to audit reports may just be an acceptance of the inevitable, but hopefully it also means that there is a growing appetite to invest and seek out investment.”

This was posted in Bdaily's Members' News section by Baker Tilly .