PwC comments on BEIS Committee report
Commenting on the BEIS Committee’s report on the Future of Audit, Hemione Hudson, Head of Assurance at PwC UK, said:
“We recognise the need for reforms which will enhance audit quality; however, the report’s recommendation to break up the largest firms risks hampering, rather than enhancing it. Arguing for ‘break-up’ sounds like action, but actually it will reduce quality, weaken resilience and distract attention from more practical steps to ensure auditing keeps pace with society’s expectations.
“There are likely to be significant unintended consequences from breaking up the large professional services firms, with increased cost and disruption to the economy and businesses which would be damaging to the UK’s competitiveness. As business secretary Greg Clark MP told the BEIS select committee, ‘audit and other professional services in this country are widely admired around the world’, and it is important that the UK remains an attractive place to do business.
“Audit quality has to remain the top priority for any reform. We are listening to concerns and responding. In addition to working closely with the ongoing reviews of the audit market, we are focused on transforming our own audit business. We are putting in place steps to strengthen governance and enhance audit quality further.
“We are supportive of many of the recommendations that enhance transparency of the audit. We agree that audit firms and the regulator must focus on increasing trust in audit and the consistency of audit quality. We believe it is also necessary to focus on the changing needs and expectations from audit. We support the report’s recommendation that Sir Donald Brydon should consider extending the scope of audit. This is backed up by our own Future of Audit initiative, in which we have consulted a wide range of stakeholders, including business and investors. Our consultation has revealed a desire for audits to be more forward looking and have a broader scope to cover other areas of reporting beyond the historical financial statements.”
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