Behind Closed Doors: What Company Audit is Really About

by V. Beattie, R. Brandt, S. Fearnley

Overview

This book takes us 'behind closed doors' to uncover the nature of the relationship between the audit engagement partner and the company finance director in major listed companies. Based on matched interviews with finance directors and audited engagement partners of six listed companies, the book uncovers both sides' perceptions of how contentious and non-contentious issues are resolved. New insights are provided about the workings of the audit process itself, how negotiation is conducted and the personal relationships and balance of power between the auditors and the board of directors.

Product Details

ISBN-13:	9780333747841
Publisher:	Palgrave Macmillan UK
Publication date:	03/13/2001
Edition description:	2001
Pages:	309
Product dimensions:	5.51(w) x 8.50(h) x 0.03(d)

About the Author

VIVIEN BEATTIE is Professor of Accounting at the University of Stirling. She has published over thirty research articles and reports, as well as contributing regularly to professional journals. Her main research interests are external audit and business reporting. She is a member of the UK Accounting Standard Board's Academic Panel. She is also a panel member for Accounting and Finance in the 2001 UK Research Assessment Exercise being undertaken in the UK.

STELLA FEARNLEY is a Reader in Accounting in the Department of Accounting and Management Science, University of Portsmouth and was formerly a senior technical manager at Grant Thornton. Her main research interests are external audit and accounting regulation, and she has published widely on these topics. She is an elected member of the Council of the Institute of Chartered Accountants in England and Wales, being Deputy Chair of its Centre for Business Performance.

RICHARD BRANDT is a Research Fellow in the Department of Accounting and Management Science, University of Portsmouth. He was previously Head of Audit at Grant Thornton for nine years, and is a former member of the Urgent Issues Task Force. He is editor of the 2000-2001 edition of Auditing and Reporting, published by ABG Professional Information.

Table of Contents

PART I Introduction and Regulatory Framework The Auditor-Client Relationship Questionnaire Stage of Study PART II Introduction to the Case Studies 'In the Top Five of the Highest Risk Clients': Nick and Simon (NS plc) 'You Can't Eat an Elephant': Thomas and James (TJ plc) 'Paul's Job is Not to Win Friends, it's to Protect Our Shareholders, and That's My Job as Well': Michael and Paul (MP plc) 'Cushions and Pillows': Colin, Richard and Andrew (CRA plc) 'They Don't Challenge Me Enough': Robert and Charles (RC plc) 'They're Almost Part of the Management Team': Dennis and Alan (DA plc) PART III The Grounded Theory Process Cross-case Analysis and Theory Development Conclusions

Editorial Reviews

'The case studies give you more idea of how companies really work on the inside than a mile-high pile of management books ever could. They also show for the first time what the realities of audit politics, fee pressures, integrity and independence, and the myth of non-audit services affecting judgement, really are. Many people will have to change their views as a result of the findings.' - Robert Bruce, Accountancy Editor, The Times

'The individual case studies are fascinating reading. The book reminds us that good auditing and good financial reporting is in the hands of human beings in both audit firms and their client companies. The quality of auditing and financial reporting is thus subject to the normal human frailties and understanding this is one of the keys to ensuring high quality. The book makes some practical recommendations for improvement as well as highlighting areas for more research, including the impact of non-audit services on auditor independence - thankfully given a clean bill of health by this study.' - The Baroness Noakes, DBE, Immediate Past President, Institute of Chartered Accountants in England and Wales

'This book is a very convincing description of the heart of the audit process. The case studies bring into play the important influence of third parties, above all, the audit committee whose skill can so clearly make a difference to the company's report. I would recommend the book highly for reading by potential audit partners and by non-executive directors, particularly audit committee members. The case studies show that you don't have to be dealing with Maxwell for your mettle to be tested. This is a research book and, for the lay reader, the real value is obtained by reading the case studies. The detailed analysis that develops a grounded theory analysis of auditor-client interactions will be of more interest to academic researchers. - Ian Hay Davison, FCA and former chairman of the Cadbury-Schweppes Audit Committee

'...the book presents a number of interesting stories about the interplay between auditors and clients as financial statements are about to be finalized. The book is likely to be of interest for both auditing students and academic scholars.' - International Journal of Accounting

Winner of the Deloitte Foundation and American Accounting Association Wildman Medal 2007. For more information, see http://www.socialfunds.com/news/release.cgi/9306.html

From the Publisher

Drawing on interviews with finance directors and auditors involved in interactions at six UK public companies, Beattie (U. of Stirling) and her co-authors (U. of Portsmouth) analyze the factors<-->from technical issues to human relationships<-->that influence the nature and outcome of audit activities. Their study outlines the extent of the effort that goes into finalizing the financial statements of a publicly listed company, an effort that's largely invisible to members of the public who rely on the financial statements to present a true and fair view. The work also looks at the impact that the auditor has on "earnings quality." Annotation c. Book News, Inc., Portland, OR (booknews.com)

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