Audit Reports Losing Their Importance

Thu, 07 Feb 2008

The importance of annual financial statements and audit reports are likely to decline over the next 20 years, a senior industry expert has revealed.

Richard Fleck, chairman of the Auditing Practices Board, told a US Treasury meeting that despite annual financial statements being an important source of information to investors, their relative importance has declined over the past 20 years, "and will probably continue to do so during the next 20".

"The value of the auditor’s report cannot be higher than the financial statements themselves," Fleck said.

The chairman’s warnings of the value of audits came during a panel meeting where issues regarding the finances and structure of accounting firms were discussed.

The discussions were part of the Treasury’s discourse on competition, choice and the long-term sustainability of the US auditing profession.

Fleck also stressed to the panel the need for auditors to increase the relevance of their work to the financial sector in order to maintain, or enhance, the quality of the staff available to audit firms .
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