David Jetuah, Accountancy Age, Tuesday 27 July 2010 at 16:05:00

Professional Oversight Board says it has "significant concerns" about theregulatory work of institutes and efforts to open up the audit market have hadlittle impact

Watchdogs have warned that accountancy institutes must improve theirmonitoring of auditors as the profession continues to come under fire for itswork in signing off company accounts.

In a report to business secretary Vince Cable, the Professional OversightBoard said it had "significant concerns" about the work of the institutescharged with keeping an eye on audit firms.

Much of the regulatory practice was of a high standard, the report said.

However there were "aspects of regulatory activity at some recognised bodiesthat give us significant concerns," POB warned.

Specifically, POB chiefs called for the monitoring of approved trainingoffices to be more rigorous.

Procedures for verifying audit experience before awarding auditqualifications also needed to be more robust, while complaints against auditorshad to be investigated "without undue delay."

While many bodies have taken many positive steps in response to previousrecommendations, POB was pessimistic about accountancy institutes being able tocheck all the firms under their watch.

"We are not confident that all recognised supervisory bodies will meet theirstatutory obligation to inspect all relevant audit firms at least once in thesix years from June 2008 without close monitoring and decisive action."

Market Participants Group recommendations on audit choice had now beenimplemented, but there was only "limited evidence that they have had asignificant impact on market concentration," POB added.

Dame Barbara Mills, chair of POB, said the report, which covered a range ofissues including the quality of audit at the large audit firms, to oversight ofprofessional bodies regulation of their members, was particularly important at atime when there was "much debate on the value and nature of audit for thefuture."

"Our work in 2010/11 will pay particular attention to how those we regulate have addressed the issues we have raised,? Mills warned.

Further reading:

Clientsblind on audit quality