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Changes in the audit industry

Monika SKÓRKA
statutory auditor, Audit Partner at RSM Poland

What changes have we observed in the audit industry over recent years? How is the specificity of the auditor's work changing? What about control over the profession?

Audit of financial statements by an independent certified auditor is an increasingly important element of communication between audited entities and their investors. It also plays a vital role in creating a sense of security among shareholders and other external actors interested in the company's condition. A few years ago an auditor's strong point in relation to the management was to require the companies to exercise a cautious approach, to be conservative. Today, after the financial markets have undergone many changes and the business model has evolved, expectations of shareholders with regard to the audit industry are quite different. The auditors are now expected to better communicate the audit results and to have a broader view of the audited subject. Not to be underestimated are all kinds of judgements and insights, which the auditor may present to the company management, relating to the financial, regulatory, operational and technology aspects. Management boards are counting on such recommendations to help them streamline the organization’s processes and improve its functioning on the market.

Financial markets have reacted to change in these expectations by introducing not only stronger oversight from regulators, but also new standards for financial review.

To increase the impact of the financial statements audit, auditors should begin to focus their work not on the verification of the historical financial data but on those elements of financial reporting that most affect the value of the business. Auditors will also need to better understand the specificity of the industry, factors affecting competitive advantage and business value of their customer to be able to bring added value to the financial statements review.