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Audit reform

Following the collapse of Carillion in January 2018 and other high profile corporate failures, there was intense public and political scrutiny of the Audit market, profession and product, leading to a number of inquiries into the future of audit in the UK.

Led by Professor Chris Humphrey, our academic experts have been prominent in a number of these inquiries, including giving evidence to the Commons BEIS Select Committee and sitting on the advisory board of the Independent Review into the Quality and Effectiveness of the UK Audit Market (led by Sir Donald Brydon).

CAIR contributions to audit reform and related media coverage >>

Key research papers

In the paper "Big Data and Changes in Audit Technology: Contemplating a research agenda", Professors Stuart Turley and Anna Samsonova-Taddei  produce one of the first empirical accounts providing a perspective on the rise of Big Data and Data Analytics (BDA) in auditing. The paper focuses on three key aspects, namely: the impact of BDA on the nature of the relationship between auditors and their clients; the consequences of the technology for the conduct of audit engagements; and the common challenges associated with embedding BDA in the audit context.

Authors: Christopher Humphrey, M Canning, Brendan O'Dwyer
Maandblad voor Accountancy en Bedrijfseconomie

It is not only in the UK where the Audit profession and industry has been under intense scrutiny and criticism in recent years. The Netherlands has also seen recent reported failings of audit practice and fines and sanctions issued against major audit firms with the profession itself identifying 53 areas for reform. In their paper Professors Chris Humphrey and Brendan O’Dwyer analyse various elements of the profession’s response to the criticisms being made of the quality of auditing, reflects on the scale and nature of identified problems, assesses the implications for the standing and future development of the auditing profession in the Netherlands and explores the scope for meaningful experiential learning and practice advancement. The paper calls for a broadening of the intellectual space within which audit is discussed and argues that practitioners, regulators and educators, must embrace a greater diversity of thought and commit to learning more from success than failure.

Authors: Emer Curtis, Christopher Humphrey, Stuart Turley

Business Risk Auditing (BRA) was an audit methodology development promoted by a number of the large international audit firms in the late 1990s as a significant innovation but which, ultimately, did not have the promised, radical impact on audit practice. In this paper Professors Chris Humphrey and Stuart Turley argue that the BRA experience demonstrates that the capacity for innovative ideas to have a generalized influence on practice is highly dependent on the interactions between a shifting mix of professional and regulatory interests and preferences. In particular, lasting innovation requires a willingness and commitment both to develop the scope of the audit and to accept variations in aspects of the execution of the audit. They conclude that this will not happen if standardization per se is seen as a necessary validation for successful innovation. This is useful when looking at how to implement Audit reform in the UK and the barriers to success.

Authors: William Turley, Christopher Humphrey, Anna Samsonova-Taddei, Javed Siddiqui
: Institute of Chartered Accountants of Scotland

In 2013 ICAS and the UK Financial Reporting Council (FRC) commissioned two international teams of researchers to investigate what mix of attributes, competencies, professional skills and qualities need to be combined in an audit team in order for it to perform a high quality public interest audit in a modern and complex global business environment. A team from the University of Manchester (with ESSEC Business School; and the University of Aston) explore the views of key audit stakeholders to address this crucial question.

Eleven pressure points were identified from the research, covering four broad categories: the context of the specific audit engagement; the development of audit personnel; firms as suppliers of audit services; and interactions with stakeholders and society. The researchers state that the audit profession has to confront these issues if auditing is to have a sustainable future and be regarded as a valued and relevant function for the demands of the modern 21st century business environment and society.