Our perspective

This is our perspective on the key themes emerging from our discussions that we see as opportunities for change.

What we heard

For the audit to move forward, the entire corporate reporting system needs to evolve

Opportunities for change

  • Strengthen the clarity and relevance of corporate reporting to ensure the entire corporate reporting ‘ecosystem’ is as effective as possible.

  • Enhance the reporting and auditing of a company’s internal controls by requiring an attestation from directors, of the design and effectiveness of a company’s internal controls, and a corresponding attestation on internal control from the auditor for larger companies.

  • Develop better engagement between the audit profession, company management, shareholders and other stakeholders, such as through a new annual assurance meeting or the introduction of an Assurance Map.

The audit should provide more clarity and insight into the company’s potential risks and future prospects

  • Create a single, coherent piece of company reporting that provides more insight into the future prospects of the company - including the scenarios in which the business model could fail, giving stakeholders a clearer picture of the risks that could lead to failure, so they can make informed decisions.
  • Provide more insight about the material uncertainties facing a company by considering whether, market-wide, auditors should include a key audit matter on going concern in public interest audit reports.

  • Consider the need to provide assurance over other forms of risk for which stakeholders may be seeking independent assurance, potentially as part of an Assurance Map exercise.

A new approach: Creating an Assurance Map

 

There should be greater assurance beyond the financial statements

  • Reporting and assurance need to expand to cover critical performance measures that stakeholders use in their decision making, such as non-GAAP financial performance measures.

The audit needs to recognise companies’ different sizes and types

  • Provide additional assurance over the companies that need it, without expanding the statutory audit for all and potentially overburdening smaller businesses.

Continued investment in technology will enable a better audit

  • Continue to develop and roll out new technologies to improve the effectiveness of audits, focusing on using technology to improve quality, efficiency and auditor insight.

Auditors must deliver consistently high quality audits

  • Increase investment in the training, technology and people required to conduct consistently high quality audits through a long-term commitment by audit firms.
  • Strengthen the culture of challenge in audit teams to ensure consistently effective scrutiny of companies.

  • Continue to reflect on how auditors can better tackle the risk of fraud, including considering the use of fraud diagnostic surveys and involvement of forensic specialists at the planning stage.

Strengthening our focus on audit quality

 

Contact us

Kevin Ellis

Chairman and Senior Partner, PwC United Kingdom

Hemione Hudson

Head of Audit, PwC United Kingdom

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