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Global downturn 'has encouraged more cautious auditing'
Accountancy News |
30/03/2010
Two-thirds of company directors believe auditors have become more cautious in the last two years, a new study has indicated.
Research conducted by KPMG indicates that professional services firms are taking fewer chances in the wake of the banking crisis.
However, this higher level of account scrutiny does not appear to have damaged client sentiment, with 40 per cent of interviewees claiming their relationship with their auditor has improved since 2008, and a further 40 per cent saying it has remained the same.
Oliver Tant, head of audit at KPMG, said the fact that auditors have become more cautious is "a function of the credit crunch" and also a sign that "they have been doing their job".
"The balance an auditor is always trying to achieve is to objectively and independently scrutinise a company's financial data, while at the same time maintaining a constructive working relationship," he explained.
"It is encouraging to see these survey results, which would indicate that this is happening."
Earlier this month, Big Four firm Ernst & Young was forced to refute claims it had, in its role as auditor, contributed to the Lehman Brothers collapse.
A group of company partners said a loss of liquidity, caused by declining asset values and falling confidence in the institution, was primarily to blame for the bankruptcy.
Posted by Stephen Wilkinson
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