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Battles Faced by Today's Auditors

Auditors Facing Hard Times

With the lingering after-effects of the Enron scandal still permeating big business, it is understandable that the nature of both audits and auditors continue to be questioned.

More specifically, there is the question of who the customers of an audit actually are. Even with supposed restrictions and rules in place, the profession remains one that is fighting for its reputation.

Auditors Under Pressure

Many would see Enron as simply the straw that broke the camel's back. Yet it took the events of 2002 to really put statutory audits under the microscope. The big issue that subsequent reports highlighted was the potential for conflict when auditors find themselves torn between the external pressures of the wider financial world and the internal stress of pleasing the corporation bosses.

Chief Financial Officers Inextricably Linked with Auditors

Some would argue it is the nature of business that chief financial officers become inextricably linked with auditors. Both jobs are numbers based, both jobs require information from each other and both jobs share resources.

The difficulty is that this blurring of boundaries can threaten the much-needed objectivity of the auditor. So as easily explained as these cosy relationships are, it is no surprise that many corporations are still attempting to ensure the distance between the two interested parties is clearly defined.

Clearer Auditing Routines

Many businesses are finding that an alteration in recruitment and line-management is producing the beneficial effect of clearer auditing routines. For example, if an auditor is recruited by a committee and not by the CFO or other senior figures, they should feel comfortable to carry out a thorough and honest job without constraints. Known as audit committees, the benefits of such an arrangement are well documented.

The Auditor Expected to Report to both the Committee and CEO

Equally, there is a school of thought that airs concerns over one internal conflict simply replacing another. The auditor is now expected to report to both the committee and to the CEO, in place of the traditional CFO and failing to remove the problem of a servant with two masters.

Increased Transparency of Auditors

In best practice examples audit committees have increased their presence within organisations by meeting more frequently and with a growing sense of professionalism. In addition to this, a simple reshuffle whereby auditor reports to committee and committee head reports to CEO can go some way to restoring the freedom and transparency of the auditors themselves.
Whether the CEO, the shareholders or any others can be classed as the customer of the audit remains a not entirely answered question. But at least the escalating prevalence of a more considered recruitment and monitoring process should ensure that internal auditors are entirely objective, completely unbiased and more than above suspicion.

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