UK auditors are rubbish at their jobs
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- เผยแพร่เมื่อ 15 พ.ค. 2024
- UK auditors are rubbish at their jobs. Major audit failures - on Carillion, BHS, Patisserie Valerie and others - prove that, as do the £150 million or so of fines large audit firms have paid for substandard audit work in the last decade or so. So what can be done about this? Do audit firms need to be broken out of the consulting firms they're linked to, or should the government take on the job instead?
ABOUT RICHARD MURPHY
Richard Murphy is Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
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They are being paid to audit these companies by these companies. They have an incentive to turn blind eyes to how companies are run.
Quite. They are doing the job they are being paid to do.
Ban private sector auditors, introduce an audit tax equivalent to their fees, and use it to fund said government audit office.
If you think that government agencies can do better, then you obviously have not dealt with government agencies
Why do you think a government office auditing accounts is any less prone to corruption and incompetence than that in the private sector? Horribly naive.
Another example is Thames Water - the last published audit (by PWC) didn't issue any warnings at all about the financial risks posed by the company's huge debt mountain.
So interesting. What about government debts, including all those debts hidden off the books that the auditors ignore.
90% inflation linked, so you can't print to pay. You have to tax or default your way out.
I thought this issue was resolved with the demise of Arthur Andersen and the creation of Accenture.
The system is absolutely ridiculous. It's the equivalent of allowing schoolchildren to hire and fire their own exam invigilators and markers. In the 1990s I worked in the tax department of a big six accountancy firm. We, along with all other departments, were essentially subordinate to the audit function - which was huge. Audit managers were situated within the clients' premises and there was a revolving career door where they would often get progression by getting employed by the client. Certainly not in their interest to point out transgressions!
At the very least, auditors have to be appointed by government and not allowed to undertake any other work for that company but, in my view, the function is ideally suited to being run as a civil service function with no wriggle room for the client to pick and choose at all.
Considering the level of corruption in politics and government putting them in charge of hiring auditors would be like the Met police investigating it's own mistakes. Nothing to see here, everyone is innocent and then get moved to another department
Public confidence in an organisation run by the state. Hmmm I wonder what could go wrong there. Problems auditing the SNP accounts, wasteful vanity money schemes. Giving them control and final say would be a worse situation than we are in now.
Retired F.C.A. here, good luck with that...
The system is bent because it was designed that way. Very few want to change it, gollow the money...
We all know why private auditors are preferred. The private sector controls the state executive and legislature. Along with public auditing, there needs to be a serious constitutional debate over conflicts of interest restricting access to public office. One should be either public sector or private, but never both.
We need better auditing in both the private and public sector because there's problems in both. Relying on government agencies to do their job properly is equally problematic to the private sector because both are failing badly.
How far would a proposal for honest accounting get with the Tories and their donors? You guess.
Well said thank you.
Even the big accountant firms are failing their duties Pwc kpmg etc just look at their historic records
The bigger they are, the worse they are, because they are addicted to the big fees and too cosy in bed with their corporate clients. Count the number of attendees to any continuing professional education lecture. The tax lectures are full, the ethics lectures are almost empty.
Yes and government is certainly not bought off by mega corporations? Turning auditors into government employees to improve audit standards? Tell me you are serious about that idea 😅.
I used to work for a Big 4 firm and I can corroborate this.
Not AB or DJ.
No we're not 😅
You probably want to do a review of the standards of the auditing profession and the accountants too. They have been under the control of governments of a right wing bent for too many damned decades.
Fair to say that if UK auditors are rubbish at their jobs then accounting professors are equally rubbish at theirs
It wasn't too long ago that the icaew was determined by, i think, the fprc to be no longer suitable to be a supervisory body of the regulated activity that auditing is. Bit telling was that. Little guys getting roasted, big ones untouchable. The practical and real face of regulation.
Get DJ audits or Auditing Yorkshire on the case. They are top class auditors.
The EU is even worse. On Thursday (05 Oct 2023) the independent ‘European Court of Auditors’ issued a damning report on the EU’s accounts for last year, identifying breath-taking sums of expenditure which have either been fraudulent or which it considers to be at ‘high risk’.
For yet another year, the EU’s Auditors concluded that the level of error in the EU’s accounts was “material and pervasive”, and have thus issued an adverse opinion on the EU’s spending in 2022.
When companies receive such a report they accept it and act on it. Not in the case of the EU Commission, who have arrogantly rejected many of the findings of this independent body they set up.
I read the report and it doesn’t seem damming, perhaps you can provide some examples? As the examples in the report were not looking like massive levels of fraud and corruption. I didn’t read all the appendices so maybe I have missed a smoking gun. Overall there was a rise in the number of findings, but to say they aren’t being acted on is somewhat disingenuous because they mention in the report around a third were closed at the point of the report being published. They track the open actions in the following year’s report, so I expect more will be closed then , as was the case of the previous years actions.
It may interest you, but I’m also taking into account the opinion of the auditors. They have signed the accounts off as “clean” which somewhat contradicts your opinion (the best outcome), my source is the companion FAQ “2022 annual report The 10 most frequently asked questions”. A document issued because of the false narrative spun by dishonest journalists.
Not sure this means EU auditors are better, but if they are it’s good to know. Another reason to rejoin I guess.
Finally, if the audit is bad, then the companies adherence to the bad set of findings is kinda meaningless. Which is the point of the video.
Duh, you people don’t understand it😂 the EU audits with due diligence and REPORTS it openly. the brexit Uk hosed it’s audits😂😂😂😂
@@col.hertford9855 The EU appointed their own Auditors because no independent Company in the World would sign off their accounts for decades.
@@billpugh58 The EU appointed their own Auditors because no independent Company in the World would sign off their accounts for decades.
@@col.hertford9855 Why dont you remainers ever look at the facts ? On Thursday (05 Oct 2023) the independent ‘European Court of Auditors’ issued a damning report on the EU’s accounts for last year, identifying breath-taking sums of expenditure which have either been fraudulent or which it considers to be at ‘high risk’. For yet another year, the EU’s Auditors concluded that the level of error in the EU’s accounts was “material and pervasive”, and have thus issued an adverse opinion on the EU’s spending in 2022. When companies receive such a report they accept it and act on it. Not in the case of the EU Commission, who have arrogantly rejected many of the findings of this independent body they set up. You are supporting a corrupt organisation only a fool would want in that
Big a 0:02 uditors are an oligopoly, so can collectively fudge audits bc they set the standards for their industry. A big step forward imo would be moving taxes from intangible, malleable, offshoreables like 'profits' to assets - real things that can't be hidden, offshored or otherwise fiddled with. Accountants would lose lots of work but accounts would be much simpler and more trustworthy.
As the world becomes increasingly more digital, won’t AI eventually take over from fallible human beings. Many people would probably consider auditing a soul destroying job, plodding their way endlessly through hundreds of transaction to check the veracity of the recording.
Rubbish sometimes.
Cynical and dishonest most often.
This is a worldwide problem as the same "big 3" firms propose the corrupt structure of auditing and consulting services under the same roof. Until the US, EU and others get together and regulate we will keep on having EMRON/Wirecard/Olympus type events on a regular basis.
There was a similar scandal in Australia recently, again one of the big firms
Lazy
The government just doesn't implement the law when they don't want to - that's the problem
A few prosecutions and jail sentences should get focus their attention ? Is government going to do a better job though ? 🤔
Imagine auditing the government accounts and ignoring that 16 trillion pounds of debt, including your own pension, is missing off the accounts.
Not a bad idea, the audit companies are negligent in their public duty right now.
What I would say is this fella has just been kicked out of Chartered accountancy regulatory body the ICAEW for being unhinged
He resigned.
Get educated. Before you comment, why not check who this guy is. Then you won't look so stupid
I have reported your comment as it is an outright lie. Murphy resigned from the ICAEW, and explained in detail on his blog why he did so. Why would you lie? Is it because you don't have a good case to make against his ideas?
Grow up
Lol, corporate shill, you have something dribbling down your chin