The Institute of Chartered Accountant in England and Wales (ICAEW) has released the report ‘Audit Insights: Manufacturing’.
The aim of the report is to highlight areas of concern from an auditor’s view point that would potentially be used by policy makers as a guidance to overcome challenges within the manufacturing sector.
Speaking at the launch of the report, ICAEW working member party and partner at Mazars Bob Neate explained that manufacturing plays an important role in the UK economy due to its contribution to the GDP and to the number of people it employs.
Neate said, however, that more work needs to be done to make sure manufacturers are able to obtain appropriate finance, as manufacturing requires considerable investment efforts to keep up with market needs.
"If people don’t understand the cyclical nature of the sector and its requirement for investment before the returns are realised, the sector’s growth potential is at serious risk.
"Manufacturing businesses and their financiers have to have nerves of steel; they must be prepared to ride out the less good times in the economic cycle to reap the long-term rewards," Neate said.
ICAEW chair of audit and assurance faculty Charles Bowman reminded that many questioned the value of audit in the wake of the financial crisis, becoming obvious that the profession needed to explain how it contributes to business confidence
Bowman continued: "The Audit Insights reports aim to capture and share more widely the unique knowledge and insights auditors gain from auditing companies within a certain sector without compromising on client confidentiality."
The report highlighted several areas of concern from an auditor’s point of view such as the "roller-coaster nature" of the sector and "the costing of fixed-price contracts, where having appropriate data/IT systems are a critical prerequisite".