UK equity investors, audit committee chairs, and various stakeholders have been actively involved in a significant survey. This research by the Centre for Public Interest Audit (CPIA) aims to shape audit best practices and influence the future of public interest entity audits in the UK. The Audit Trust Index, a part of CPIA's efforts, tracks audit trust perceptions and uncovers emerging trends in the audit profession.

Key Findings and Concerns

One-third of audit committee chairs, 21% of investors, and 16% of finance directors express concerns about auditors' ability to detect financial distress and going concern issues. This highlights the importance of enhanced auditor capabilities in this regard. Additionally, stakeholders have pointed out areas for improvement, such as increased transparency between auditors and stakeholders, which they believe would significantly impact audit value.

Survey Participants and Satisfaction

UK equity investors, FTSE 350 finance directors, and audit committee chairs participated in the survey. Remarkably, 94% of audit committee chairs, 86% of finance directors, and 77% of investors are satisfied with the overall audit quality. This indicates a generally positive outlook in the audit landscape.

Stakeholder Demands for Audit Value

Finance directors emphasize the need for clearer reporting on key judgements and risks, along with real-time issue reporting, to increase audit value. They recognize the significance of these aspects in providing a more comprehensive and useful audit. On the other hand, audit committee chairs are more likely to express dissatisfaction with the value of external audits, with 22% expressing dissatisfaction compared to 6% of investors and 2% of finance directors. This shows a disparity in perspectives among different stakeholder groups.

Investor Perceptions and Uncertainties

More than half of investors find audit reports clear and informative, while 40% describe them as somewhat clear. However, 15% of investors lack confidence in auditors' independence and objectivity, indicating a certain level of uncertainty. Despite this, 94% of finance directors and 84% of investors provide positive feedback, suggesting a mixed picture of investor attitudes.

Addressing Concerns and Future Plans

The CPIA plans to address concerns about conflicts of interest to maintain trust. This is a crucial step in ensuring the integrity of the audit process. Additionally, 15% of investors and 14% of finance directors neither agreed nor disagreed that auditors responded well to fraud risk. This highlights the need for continuous improvement in auditor responsiveness to fraud-related issues. CPIA Interim Executive director Katie Canell emphasizes that despite progress over the past six years, gaps between expectations and outcomes on audit remain evident. The organization aims to use its voice to constructively challenge the status quo and benefit all stakeholders.