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Audit Insights

Audit is a public interest activity. Audit reports build confidence in financial statements, and give credibility to companies, and comfort to their stakeholders. Companies also benefit from the insight that auditors have into business processes and the wider market environment.

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Audit Insights is an opportunity for auditors to bring their knowledge of a market sector to the public, capturing more of the audit value for the public interest. Shared insight and observations have been brought together, in an environment that protects client confidentiality, to produce these reports.

Audit insights: small businesses

The most important challenge that small businesses face in their early years is to survive. In this publication we highlight some of the key areas which we believe are important for their survival and put forward ideas for helping them to compete more effectively.

Audit Insights: Corporate reporting

Company reports are still too long and can make it difficult to hold companies to account for their performance. Collective action is needed by preparers, audits, regulators and investors if a solution is to be found. In Audit insights: corporate reporting we offer recommendations for improvements in seven important areas of non-financial reporting. We hope that our report will also reignite the debate over how corporate reporting needs to change if it is to improve communication and accountability.

Seven questions and a debate for 2016 company reporting season

We have produced a short guide that highlights seven important questions that financial directors, audit committee members and auditors should be asking to produce reports that communicate clearly and improve accountability.

Audit Insights: Insurance

This report focuses on four challenges facing the insurance sector. It is based on the collective insights of a group of external audit experts, with many years’ combined experience of auditing insurance companies. ICAEW would like to thank BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars, PKF Littlejohn and PwC for their contributions to the report.

Rapid economic, social, political and environmental changes occurring across the globe are leading to significant changes in the risks that the insurance industry provides protection against. The industry must evolve to remain viable in the future. The outcome of risks cannot be fully known, but the identification, measurement and management of these various risks is essential to the success of insurers. Our report is set against the context of changes in society, the economy and technology. It seeks to provide insight into how this complex industry will meet these changes, continue to thrive, and maintain its social purpose. Through this report we want to undermine the myth that it is too difficult to have a meaningful conversation about insurance by considering what is “fair” insurance cover, the use of data, how to ensure customers can ensure they’re buying the right products and what companies must do to face challenging economic times.

Audit Insights: Retail, Like-for-like sales is not the only story

The retailers who win Black Friday and Christmas are not necessarily those who have made the most like-for-like sales. The most important information that is sometimes overlooked is how profitable are the like-for-like sales.

In this latest Audit insights: retail report we focus on three key areas – changing business models, the impact of the living wage and the volatility of foreign exchanges – and ask the questions that investors, retailers, auditors and the media need to consider if they are to provide clarity and understanding on how well retailers are making profits.

Audit Insights: Cyber Security, closing the cyber gap

Cyber security breaches continue to increase in frequency as businesses struggle to get cyber security right. Boards are finding it difficult to have meaningful discussions about security and approaches to supply chain cyber risks result in a lot of paperwork but few improvements in practice. It’s no wonder hackers are accessing more and more information from large companies and making headline news in the process.

In this latest Audit Insights: Cyber Security report, we examine the approaches companies and boards should take to ensure systems are secure, and to manage the impact of breaches. In our report we assess how companies are trying to tackle the problem and make recommendations for preventing future security breaches while also highlighting areas where opportunities for positive change exist.

Audit Insights: Cyber Security 2015

Cyber Security is the work of a group of audit experts from the six largest audit firms based on their many years of experience in IT audit and assurance in the UK and internationally, and based on their current involvement in planning and delivering IT audit and assurance engagements. This 2015 report provides an update to the four flags highlighted in the first Audit Insights: Cyber Security report, published in November 2013.

Audit Insights: Construction

The sixth report in the Audit Insights series focuses on the construction sector. It is based on the collective insights of a group of external audit experts, mainly from large and medium-sized audit firms with many years’ combined experience of auditing companies in the construction sector. Representatives from Baker Tilly, BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars, PwC and the Orange Partnership formed the working group.

Construction has been hard hit by the economic downturn in recent years and its effects are still being felt. But the sector is recovering and confidence is improving. There are increased levels of employment, a huge need for infrastructure and a ‘wall of money’ potentially available to invest. But with these big opportunities comes responsibility. It is not a time for complacency and politicians, construction businesses and sector representatives all have a role to play in addressing the challenges the sector continues to face. The report identifies five areas in the current landscape that auditors think are of most interest and relevance to construction businesses, investors, policy-makers and other construction stakeholders.

Audit Insights: Retail 2014

Audit Insights: Retail 2014 has been drafted by a group of audit experts from the six largest audit firms based on their many years’ combined experience auditing retail businesses across the UK and internationally, and based on their current involvement in planning and delivering audits in the sector. Their sketch of the sector landscape is based on the flags carefully chosen in the first Audit Insights:Retail, published in January 2013, which mark out the most immediate areas of interest.

This report seeks to explore issues that may not have reached an audience outside the retail sector, and to bring forward the trends and issues that interest auditors and affect every retail stakeholder.

Audit Insights: Cyber Security

The importance of cyber security has grown in recent years as reliance on information technology and the internet has increased. Cyber security issues affect businesses of all sizes and across all sectors. Managing cyber-based risks to individual businesses, as well as the wider economy, also requires many different stakeholders to work together.

Audit Insights: Cyber Security, the fourth in the Audit Insights series, aims to support informed public debate in this area and help businesses to understand the changing nature of the threats that they face. It is the work of a group of external audit experts from large and medium-sized audit firms with many years’ combined experience of auditing companies. Representatives of the following firms formed the working group of external audit experts: BDO , Deloitte, EY, Grant Thornton, KPMG and PwC.

This report highlights four areas that external auditors believe are of most interest and relevance to senior management, non-executive directors, investors, policy-makers and other stakeholders.

Audit Insights: Banking

Our report Audit Insights: Banking is the third in ICAEW’s Audit Insights series and follows reports on retail and manufacturing. It is based on the collective insights of banking audit specialists from BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars, the National Audit Office and PwC.

Since the start of the credit crunch in 2007 and through the global financial crisis that ensued banks have made changes to their businesses, improved the information they publish and strengthened governance and internal control. There have also been major reforms to how banks are regulated. All this has made banks safer but has also added to their costs of doing business. Bank customers may need to pay more for a narrower range of banking products and services.

Our report highlights long-term business challenges that banks still face, set out as four flags. These relate to: cultural change; the potential need to rethink their business models; challenges in measures used to assess their financial strength and performance; and demands for major IT investment.

Responsibility rests primarily with bank boards and there are no quick or easy fixes.

Audit Insights: Manufacturing

The second report in our Audit Insights series focuses on the manufacturing sector. It has been drafted by a group of audit experts from the larger audit firms based on their many years’ combined experience working with manufacturing clients across the UK and internationally, and based on their current involvement in planning and delivering audits in the sector. Their sketch of the sector landscape is highlighted by carefully chosen flags, marking out the most immediate areas of interest. With so much focus on a perceived need to rebalance the UK’s economy away from financial services and towards manufacturing, this report could also provide policy makers with a helpful steer on the major challenges and opportunities for the sector.

This report seeks to explore issues that may not have reached an audience outside the manufacturing sector, and to bring forward the trends and issues that interest the auditors and affect every manufacturing stakeholder.

Audit Insights: Retail 2013

Audit Insights: retail has been drafted by a group of audit experts from the six largest audit firms based on their many years’ combined experience working with retail clients across the UK and internationally, and based on their current involvement in planning and delivering audits in the sector. Their sketch of the sector landscape is highlighted by carefully chosen flags, marking out the most immediate areas of interest.

This report seeks to explore issues that may not have reached an audience outside the retail sector, and to bring forward the trends and issues that interest the auditors and affect every retail stakeholder.

Inspiration: Program Sharing Knowledge

In 2010 the Nederlandse Beroepsorganisatie van Accountants (NBA) started Program Sharing Knowledge, designed to identify and capture information on structural risks across entire sectors by making use of auditors’ expertise. A key element in this programme was the creation of public management letters, reports drawing on the work and insights of auditors to identify risks, addressed to all the stakeholders in a given sector.

Inspired by the success of Program Sharing Knowledge, the Audit and Assurance Faculty have developed Audit Insights and our own Sector Report process to harness the expertise of auditors in the UK.