An Institute of Chartered Accountants in
England and Wales (ICAEW) survey has found stakeholders believe the
audit process does not provide useful information to users and is
merely a statement of compliance.
The ICAEW study was conducted by its financial
services faculty to analyse ways in which bank auditors can support
more confidence in financial reporting.
The survey sought the opinion of stakeholders
including investors, bank representatives and policymakers.
The report found stakeholders highly respected
auditors skills and that the audit process regarded as essential in
imposing discipline upon directors’ presentation of financial
However, they did not think the process
provides useful information to users.
Stakeholders thought auditors could do more
reporting on risks and wanted to know the subjective opinions of
However, bank representatives felt this was an
unrealistic goal, as there are no objective standards against which
judgements could be measured.
Investors also called for more regular
dialogue between the regulator and auditors of major banks and an
improvement to the quality of these meetings
There were calls for new guidance and
protocols to cover what is to be expected from such meetings to
ensure they are effective.
The ‘Audit of banks: lessons from the crisis’
project follows the work of the UK House of Commons Treasury
Committee which, in its Ninth Report of Session 2008-09, questioned
the value of audit.
It’s the second phase of a project that began
with the development of a paper for discussion with bank finance
directors, audit committee chairs, investor representatives,
regulators and other interested parties.
The faculty expects to publish a final report
in May 2010.