Page 30 - Auditors Article

3. Those who choose the auditors are generally not the

ones who need the report. Usually it is management and
the board that authorise the report and provide the

information. However, in Patisserie Valerie the fraud was

apparently, perpetrated by a board member, namely the

CFO. Those who really need the report customers,
suppliers, investors, and creditors such as Mike Ashley

who when valuing the company was at a serious

disadvantage.

4. The Big Four are an oligopoly in the general financial
market but, in the auditing market for banks it is the Big

Three – EY does not participate – accounting for 99% of all

bank audits. [Hodgkinson, A., 2019, Bowdler, L., 2019]
5. Conflicts of interest - the Big Four, not only sell their

auditing services but also consultancy and IT services.

This must raise questions over the efficacy of the auditing

function. More than half of their turnover was from

consultancy work by the mid-90s [Financial Times, 5,2019,
Blackburn, V.,2018]

6. The ‘Big Four’ are politically powerful. They influence

industry rule setting and play a major part in setting
direction the industry will take.

7. Sentencing of wrongdoing is light – auditors use the

defence of “professional judgment” when challenged.
[Financial Times, 3]