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FRC wants to bring audit closer to investor needs

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10 Feb 2011

In a speech given at the European Commission conference on financial reporting and auditing today, Stephen Haddrill, chief executive of the UK Financial Reporting Council, said, that it is high time to close the gap between what audit does and what users expect from an audit of the financial statements.

According to Mr Haddrill investors must be given more information about the prospects of the company and a better picture of the future of the business and of the judgements made in the course of the preparation of the financial statements.

Here is an extract:

In short, we want investors to learn about the business and its future from the directors; we want the directors to say more about the things that really keep them awake at night; and we want to empower auditors to challenge management by requiring them to say whether the Board have really given a balanced and fair view on these matters as well as on the accounts.

[...]

And we need an audit profession that [...] is not afraid to challenge management. One that is sceptical of assertions made without apparent good foundation – that does not see its role as confirming management's view, but identifying the truth.

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