An FMA research project with investors, directors, managers and auditors has identified reasonable levels of confidence in audit quality, but also a serious gap in the expectations of investors and what auditors deliver. The FMA commissioned the research to better understand public and industry perceptions of audit quality in New Zealand.
Just over half of investors surveyed (56%) agreed they would trust the audit profession to act with ethics and integrity, while 68% of company directors indicated they trusted the audit profession. When asked the same question, 98% of auditors trusted their profession.
There is a similar gap between investors and the profession’s view of itself when asked about the independence of auditors, and their level of professional scepticism and ability to challenge management and directors in conducting their audits reviews.
About half of investors (48%) thought the quality of audit was of a high standard, with more directors (57%) agreeing audit was of high quality.
Rob Everett, FMA Chief Executive said: “Auditors have an important role to play in contributing to market integrity and informed, investor decision-making.
“While we can see that overall confidence is positive, serious expectation gaps exist among stakeholders with what they believe audit actually delivers. Our research shows that investors are not connected to the value that auditors can bring. To fill these gaps we need a concerted effort from the industry to explain their work and how they operate.
“The research also identifies the role the FMA can play to improve public understanding about the regulation and oversight of the licensed audit profession.”
The findings and insights from the survey have been provided to the industry to help auditors and audit firms improve how they provide assurance to investors. Investors are the end – user of audit services, in terms of the audited financial information they rely on to make informed decision about investing their money, so it’s critical for auditors to responds to investors’ expectations.
Rob Everett spoke about the survey results in a forum for the audit profession in Auckland yesterday.