Investors and businesses want auditors to reveal more information about a company’s future prospects and to highlight weak spots, new research by auditing firm PwC has found.
The Future of Audit report, released today, is based on a survey of 175 investors who all invest in UK businesses, and 198 business leaders. It found that nearly 60% of investors think auditing practices fail to meet their needs.
The Financial Reporting Council said last year that PwC failed to flag up risks ahead of BHS’s demise in 2016, and landed the auditor with a £6.5m fine.
In the report, stakeholders said they wanted there to be a greater focus on the future, including for the audit to provide assurance about a company’s future prospects, a “clearer signaling of risk in the annual report and, in turn, in the audit report”, and a stronger viability statement from a company that ”explicitly sets out its appetite for risk”.
They also outlined the need for greater transparency through the auditor’s report by providing the auditor’s view of a company’s prospects and the risks it faces, and how well equipped the company is to manage them.