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Pan-European database on inspections of audit firms has been launched
UKSA welcomes this month’s launch of a common database on which European audit regulators will be able to study each other’s inspectors’ reports on the ten largest European audit firm networks: PwC, KPMG, Deloitte, EY, BDO, Grant Thornton, Nexia, Baker Tilly, Mazars and Moore Stephens. These are responsible for auditing ‘public interest entities’ (PIEs) -- banks, insurance companies and other companies of similar importance.
Inspections of audit firms of are performed periodically with the objective of improving the quality of audits. They generally include a review of the audit firm’s internal quality control procedures and a review of selected audits to test compliance with professional standards. This non-public database will enable inspectors’ findings to be exchanged between the 27 European countries involved, contribute to a consistent understanding of issues and help establish common approaches in addressing audit deficiencies.
This Europe-wide project was initiated by the European Audit Inspection Group established in 2011 whose website is www.eaigweb.org. Although of limited scope, the announcement is most welcome.
UKSA further welcomes recent evidence that PIEs are prepared to put their audits out to tender and break too-long-established auditor relationships. UKSA wants to see more substantial improvements in the conduct of audits and much better auditor accountability. Private investors have lost too much in recent years to have confidence in an unchanged audit process.