Page 22 - Patisserie Valerie Teaching Note

A12 “Mandating a term limit of five years would go a long way to

improving audits, argues David Mann in online comments,

although the price would likely have to increase a little. As I
recall, you do the best work in year one, as you ask all the good

questions. By year three you’ve got the thing running efficiently

and you make all your money from there on. The trouble is that
by then you’re familiar with all the answers to the questions

you asked in year one, so your audit is not of the same quality.
“(23)

“However, there are reasons why this is not fully thought

through. First, the Big Four operate in the UK as part of global
networks. Splitting the firms in the UK would achieve little

except making Britain a peculiarity — and the UK arms would

have to ally with global networks to undertake multinational
audits.” (23)

It has been argued that creating audit-only firms would be to

the detriment of the capital markets. (1) as the multi-
disciplinary model provides the depth and range of skills

required to deliver high quality audits in the public interest.

(23)

“In part, trust and confidence has fallen due to the expectation

gap — the difference between what an audit does and what
some people think it does — but in times of sophisticated

institutional investors, professional audit committees and

public reporting of audit firm inspections, it is overly simplistic
to say this is the only issue. We support an independent review

of the role and responsibilities of auditors with input from

investors, regulators, standard setters, auditors and especially
the wider public. It needs to be forward looking and to consider

what could and should be done to meet investor and broader

societal expectations in an age of enormous technology
transformation.” (23)