Page 3 - Auditors Article

Introduction

The word audit means to survey or check and as such forms

part of an annual, statutory requirement for all U.K. listed and
large companies. Its purpose is to provide assurance to

shareholders that the financial statements give a true and fair

view of the company. Additionally, it also helps protect
employees, pension holders, suppliers, customers and the

wider community through underpinning both transparency

and integrity in business. [Financial Times, 3, 2019, House of Commons
Library, 2019]

In the past financial statements used to be historically- (cost)

based. They were precise, auditable and useless. They looked

to the past not the future. Current or market values, had been
part of UK accounting since company audits began. However,

over the last three decades this changed when the audit’s

perceived usefulness was enhanced by a prominence being

placed on market values and forward-looking estimates which
in themselves are essentially guesswork. Thus, the primary

purpose of accounts morphed into its present form where the

objective is to present information that is “useful to users”

[Financial Times, 1,3, 2019, ICAEW, 2019]

“Ferreting after facts was once the auditors’ main vocation:

certifying information to assure investors that a company’s

numbers were “true and fair”. The process allows managers to pull
forward anticipated profits and unrealised gains, and write them

up as today’s surpluses. [Financial Times, 3, 2019]