Risk 

Get audit wise

Get audit wise

From outsourcing to retail, supermarkets to telecoms, high-profile accounting misstatements have been a common occurrence for UK plc in recent years. Accompanying them have been profit warnings and, in some cases, corporate collapse. As investors ask themselves what was missed, and how these failures could have been avoided, scrutiny of the role of the auditor – and specifically the big four firms, KPMG, PricewaterhouseCoopers (PwC), Deloitte and Ernst & Young (EY) – has intensified. This is not an unreasonable line of enquiry. After all, the main reason these firms are appointed is to give companies’ financial health the thumbs up. And while the auditors don’t draw up the accounts (that’s the job of a company’s finance team), they are charged with checking their accuracy. The question for private investors is how much faith should be put in auditors to do a good enough job?

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