Date: 21 April 2020
Time: 12:00 BST
In this webinar, Carolyn Cordery will draw on current examples which challenge the value of public sector audit, and report on analysis of survey research undertaken with Professor David Hay (University of Auckland) amongst members of INTOSAI. She will outline some potential effects of current and future events on the value of public sector audit, to stimulate discussion on responses to these uncertain times.’
Across a number of countries, the value of private-sector audit is being closely scrutinised due to audit failure. The legitimacy of the statutory audit in the private sector is under question, as are the structures of the accounting firms who deliver audit. The third review within a year into the quality and effectiveness of UK auditing has sought views to develop ‘a more useful and forward-looking audit’.
Is the public sector audit space any different? We have previously argued that public sector audit adds value by being inter alia – independent, high quality and useful to improve public sector practices. Increasingly Supreme Audit Institutions (SAIs) use external professions (Big 4 firms and others) in seeking to add value. Projected changes in private-sector audit and the composition of audit firms is likely to alter this relationship.
In addition, the continued rise of public sector contracting-out of services raises the question of which entities should be subject to SAI audit. A case in point is the UK-based firm Carillion which operated c. 420 UK public sector contracts (worth £1.7 bn). Despite receiving a clean statutory audit, it failed in 2018 with debts of £1.5bn, leaving thousands unemployed, numerous outstanding creditors and public sector contracts unfulfilled. Should the value of public audit be judged by the performance of its government’s contractors?
Further, examples of fraud being found despite clean audits (e.g. in 2018 Patisserie Valerie, GroceryAid), have re-confirmed the public expectation that auditors will find fraud as part of their duties. Will these expectations spill over to the public sector and affect the balance of SAIs’ services, specifically that between compliance, financial, and performance audits?