What are some of the proposed changes?
- They are pushing to include more non-financial information.
- They want quarterly financial statements to be replaced by real-time Internet-based reporting.
- They want to create and present a menu of fraud audit proposals at different pricing.
- Individual auditors (instead of the firm) be subject to penalty for faulty audits.
Who are the parties to this 24-page proposal?
PricewaterhouseCoopers, KPMG, Ernst & Young, Deloitte, Grant Thornton and BDO
Basis to include non-financial information
KPMG Singapore’s head of audit, Tham Sai Choy explained the close link between non-financial information and valuation of a company. Example of non-financial information – the changes to a company’s oil reserves, a telco’s subscriber numbers, an airline’s load factor etc. Is there a need for these numbers to be audited too as they become more and more meaningful in giving guidance to investors on its performance?
Basis for Internet-based reporting
The report has also suggested that information be easily accessed by users through new Internet-based reporting technologies. The main reason for the lag is the need to assure quality and reliability of business information to users. Till then, paper-based financial statements will prevail as the only legitimate form of communicating performance.
Basis for fraud audit proposals at different pricing
- to close the expectation gap with clients to expect auditors to discover frauds and errors under current audit programmes
- to provide clients with a choice on the level of intensity of investigative work needed
It is an amazing effort for so many key players of the auditing industry to be able to come together present a united front. But what is the true underlying driving this cohesion? Is the auditing profession looking at how they can enhance their relevance to the business community and thus ensure their continued economic existence? One of the proposals highlighted the need for individual auditors (instead of the firm) be subject to penalty for faulty audits.
In any industry, the industry players are encouraged to do some self-regulation to ensure service quality and fair existence before the strong arms of the LAW come in and take full control of its destiny.