There is always much scrutiny in the industry and in the press about the ethics of auditors especially when big cases hit the press such as Enron or Tesco. One of the largest threats to a firm like Kelsall Steele is independence, being able to separate the work surrounding year end accounts, management accounts, budget preparation and the one off year end exercise of the statutory audit.
An audit must be carried out without the non-audit work affecting the opinion to be given on the audit report. We always flag to our clients this potential issue and we talk about how we introduce safeguards to negate the threat of our independence. We often have separate staff preparing the accounts to those carrying out the audit work and we make no decisions for the client. Every posting to the bookkeeping software, every adjustment to the accounts, all accounting estimates are decided, agreed and implemented by our clients.
We therefore sidestep the self review threat which goes hand in hand with this issue as the client is making his/her own adjustments to their accounting systems. We are able to provide the background to decision making, such as implementation of FRS102 but the end game of writing down goodwill, for example, or valuing freehold properties lies with the client as they are the most knowledgeable people in their own businesses and are best placed to make the ultimate decisions.
If you would like to discuss your audit requirements with us, please give us a call.