Joint audit is the only solution to address the problems of audit independence, quality, and competition in the audit market. Joint audit is an arrangement where two or more audit firms share the responsibility for the audit of a company, producing a single audit report. This practice is mandated in some countries, such as France, Belgium, and South Africa, and has proven to be effective and beneficial for the audit quality and market. One of the main advantages of joint audit is that it enhances audit independence, which in itself is an enabler of the greatest credibility of the financial reporting. By having two or more audit firms involved, the risk of conflicts of interest and the incentives to provide non-audit services to audit clients are reduced, as the joint auditors would have to agree on the scope and nature of such services. Moreover, joint audit brings diverse perspectives and expertise to the table, which can improve the quality and reliability of the audit work and the audit opinion. Another benefit of joint audit is that it creates more opportunities for the challenger firms to enter the market and gain experience and reputation, thus increasing the audit choice and competition. By working alongside the Big Four firms, the challenger firms can learn from their best practices and methodologies, as well as demonstrate their capabilities and professionalism to the audit clients and the regulators.
This can help them to expand their market share and challenge the dominance of the Big Four firms, which can lead to more innovation and efficiency in the audit market. In conclusion, joint audit is the only solution to address the problems of audit independence, quality, and competition in the audit market, and I strongly believe that it should be adopted by more countries. I urge the US, the EU, and the UK to follow the example of France, Belgium, and South Africa, and introduce joint audit at least for the public interest entities, as these are of systemic importance for the economy. We cannot afford to wait for another audit scandal or financial crisis to expose the flaws of the audit market. We need to demand that our regulators and policymakers adopt joint audit as a mandatory requirement for the public interest entities. As Albert Einstein once said: “The definition of insanity is doing the same thing over and over again and expecting different results”. If we want to improve the audit market, we need to change the way we audit the companies. The time for action is now!
31/01/2024
Source: https://www.ft.com/content/a3bdf4fc-151c-436f-aeb9-b5e9b4d60d23