Audit reports 'will decline in importance'

News Article - 08 February 2008
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The value of audit reports is likely to decline over the next 20 years, the chairman of the Auditing Practices Board has claimed.

Reported in Accountancy Age, Richard Fleck also said that financial statements are important source of information to investors but their relative importance has been steadily declining.

Mr Fleck made his comments to a committee chaired by Securities and Exchange Commission former chairman Arthur Levitt as part of the Treasury's dialogue on competition, choice and the future of the US audit industry, the publication stated.

"The quality of the staff available to audit firms can only be maintained, or enhanced, if auditors increase the relevance of their work to the financial community," he said.

His comments follow calls for enhanced disclosure in financial statements, yet Mr Fleck warned that companies may not respond to the concerns and it may result in "boiler-plate" language being used.

Edward Nusbaum, chairman of Grant Thornton International, has previously asked the committee to consider complete transparency in audit reports such as the inclusion of motives for switching auditors or contracts and also the audit committee's process in choosing, evaluating and compensating the auditor.

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