Question

Locate an recent current event that has to do with auditing in some way and share it with the class.  How will this event impact the auditing profession going forward and what are concerns you had after reading about this event?

Answer 1

A recent current event involving auditing occurred in June 2019 in UK when PwC (Price Waterhouse Coopers), a big 4 audit firm, was fined 4.55 million pounds over the audit of a company called Redcentric. UK accounting watchdog held that PwC failed to challenge Redcentric’s management with regards to a gap in the financial and accounting books of the company. PwC was held for lax monitoring and poor support of its audit practice and this led to breaches that were fundamental and basic in nature.

This event will have a significant impact on the auditing profession going forward and companies like PwC will have to augment the levels of its professional standards. What concerns me is that in future quality of audits will remain an area of concern as audit firms will grapple with increased exposure to risk. Secondly it is not always easy to exercise professional skepticism in all situations and several audit firms will have to deal with this. Secondly audit firms will have to learn to deal with disruptions like technological revolution (blockchain for instance) and shifting geopolitical landscape (the eminent exit of UK from EU) to properly manage their risk exposure and ensure that high standards of professionalism is maintained.