The Benefits of Joint Audit
Joint Audit is a tested and proven mechanism to facilitate the emergence of new players and, in the case of France, has already led to creating the least concentrated audit market of any major economy. If undertaken in the right spirit of collaboration, we believe joint audit also reinforces governance arrangements on the conduct of audits and delivers real improvements in audit quality.
Implemented correctly, Joint Audit offers clear and demonstrable benefits in terms of macro economic policy, independence and objectivity, quality, and technical knowledge.
• The only proven mechanism enabling new entrants into the audit market for large multinational companies.
• Stimulates competition between a greater number of audit firms from different cultural backgrounds, resulting in more innovation and better response to market needs.
• Enables the smaller firms to get on a ladder of investments, be it in terms of geographic coverage, sector expertise or size.
• Mitigates the risk of the Big 4 becoming the Big 3 which would result in certain regulatory capture.
• Reinforces auditor independence, in particular over proper acceptance of non-audit services.
• Reduces the risk of over-familiarity through rotating the allocation of fieldwork between the joint auditors after a set number of years.
• Reinforces the auditors’ ability to stand their ground in the event of a disagreement with the company.
• Encourages healthy dialogue between the two audit firms appointed which brings a critical eye on the respective work of each auditor.
• Reinforces audit quality via the “four eyes” principle by creating timely and in-built independent quality control.
• Stimulates innovation and awareness (“critical eye”) through rotating fieldwork after a set number of years.
• Enables a smooth and sequenced rotation of audit firms which minimises disruption to the client by harmoniously transferring knowledge and understanding of the company’s operations and culture.
• Offers the audited group a broader spectrum of skills and geographic coverage to work / choose from.
• Enables comparison of service levels between the firms which drives service quality up.
• Is fully compliant with International Auditing Standards, in particular ISA 600.
• Enables companies to benefit from the technical expertise of more than one audit firm and to have a richer discussion on complex technical issues.
• Increases the technical knowledge base by encouraging a more diverse audit market.
• Offers additional scope for benchmarking best practice across the market.
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Joint Audit in the UK
Our goal is to help create a vibrant, innovative audit market which meets the needs of shareholders, broader stakeholders, and wider society. To do this, we must kick-start the creation of a competitive market which encourages new players to take on the audits of large Public Interest Entity (PIE) companies.
Joint Audit: The Facts
In the UK, Joint Audit represents a different and unfamiliar way of approach the audit process. It is also widely misunderstood thanks to a continued focus on decades-old anecdotes based on a limited experience of joint audits undertaken in very different circumstances to those in the present.