3rd March 2021
Sarah Jenkins, Partner at MGI Worldwide CPAAI accounting network member firm Milsted Langdon, contributes to a recent discussion about the UK Accounting Industry and its ability to adapt and evolve to meet client expectations in the light of COVID and new post-Brexit regulations.
Audit quality and industry diversity
Recent audit quality reviews have shown that audit firms often do not challenge the management of audited entities effectively on the significant judgements they have made.
Where clients have sophisticated accounting functions, the challenge is often around judgements made in areas which may not be covered by accounting standards.
For clients with a demand for less sophisticated accounting functions, there may be a difficulty in their understanding that firms have to justify certain decisions. Sarah elaborates:
“Owner-managers often have little formal accounting training, and whilst they are used to making judgements in running their business, they do not always appreciate that this may be significant for the purposes of accounting information. It is seen as being just part of the day-to-day running of the business and is almost certainly not documented. Why these decisions need to be justified to the auditor may not necessarily be understood.”
Speaking further of the impact of these challenges, it was explained that the key to being able to challenge management judgements is by ensuring a detailed understanding of the outcome, the process by which it was arrived at, and alternatives considered in these judgements is established.
Identifying rising stars
Another area explored in the article is the increasing diversity at partner level and the identification of rising stars. Sarah shared her thoughts:
“We identify our rising stars at an early stage in their careers so that we can mentor and nurture them. They also need to have role models who they can aspire to and learn from – and with four fixed-share female partners and one equity female partner out of a total of 22 partners, our aspiring women already have a number of role models.”
It was noted that, unfortunately, in many cases, it comes down to competing with legacy issues, coupled with the fact women have children, which can be a challenge in maintain this diversity, but that home working can provide a flexible solution for many. Sarah continued to speak about how working and collaborating remotely needs to be combined with an element of physical interaction.
“Over time clients will expect to interact in person more readily. Going forward, the working week will be split between home and office working, spread across core and non-core working hours depending on individual circumstances.”
Read the full article
To read the full article in the January edition of the IAB, please log in to the Member Area of the website and click on Key International Organisations at the bottom of the left-hand menu.
MGI Worldwide with CPAAI is a top 20 ranked global accounting network and association with almost 10,000 professionals, accountants and tax experts in some 460 locations in almost 100 countries around the world.