Audit committee chairs share perceptions on the value of audit

The External Reporting Board (XRB) has released research into audit committee chairs’ perceptions of the quality of audits.

The Trust and Confidence report aims to inform discussions on the role of audit in maintaining trust and confidence in financial reporting in New Zealand, as well as examining how the XRB’s standards contribute to enhancing trust and confidence.

The research found that trust and confidence in reported information in New Zealand is high and that auditing standards are a key contributing factor to this.

It confirmed the importance of XRB’s approach – aligning with international and Australian accounting and auditing standards – and that XRB’s convergence and harmonisation policy is serving listed entities in New Zealand well.

Another factor the research highlighted is the importance of the relationship between the audit committee and the auditor.

But there were concerns raised about the audit market, primarily about auditor concentration (in the Big Four audit firms). Talent attraction and retention in the audit profession were also flagged as issues facing the audit industry, with a shortage of auditors being particularly noted by those who required audit services in regional New Zealand.

Sustainability assurance was a focus among audit committee chairs and there was broad appreciation for New Zealand leading the way with climate-related disclosures, but recognition that challenges remain due to a lack of in-house expertise in this relatively new reporting area.

The report notes that the key research findings were similar to perceptions from recently completed Australian research. 

See also the attached article on “The rising cost of audit fees” and KPMG’s accompanying 2023 Audit Quality Transparency Report where KPMG notes that the cost of audits are rising due to a shortage of auditors at the same time as auditors face increasing demands around compliance and complexity. Very similar issues raised in the XRB research.

The IoD expresses our gratitude to all of our audit committee chair members who participated in this research project.