Page 29 - Auditors Article

THE PROBLEM

Why are the ‘big Four’ so dominant? Perhaps the BEIS is

correct in apportioning some of the responsibility to the

complacency in large corporates towards their auditors, where

they found that of FTSE 100 auditors remain in place for an
average of 48 years. [Bowdler, L.,2019] For Patisserie Valerie this

was fourteen years. Perhaps both big clients and the ‘Big Four’

see their relationship as based on perceived prestige.

This cosy relationship is enhanced if the banks insist that as

part of their loans corporate borrowers must not use a non-
Big Four auditor. [Bowdler, L.,2019] The following highlights some

major problems:

1. The market is captured – all major companies must

deliver an annual audit. Patisserie Valerie was no

exception and therefore cannot be avoided.

2. Based on what is provided an audit is essentially a
commodity which is pronounced fine or not fine with

nothing in between. The importance of accurate financial

statements in making lending/investing decisions cannot

be overstated. In some instances, the rules excuse
auditors from responsibility over their clients’ accounting

estimates because such estimates are inherently

unverifiable. [Financial Times, 3] In the case of Patisserie
Valerie all was fine until it was not.