"The ultimate responsibility for financial statements may lie with corporate managers, but by any measure, the audit firms have failed miserably in their role as financial watchdogs." This conclusion is based on results of the second in a series of four surveys on corporate financial practices produced by CFO Magazine.
The CFO Survey of Auditor-Client Relationships demonstrates that 38% of auditors challenge the accounting practices of their clients, yet 57% of the clients retaliate by either convincing the auditor to go along with the practice or convincing the auditor that the results in question are immaterial.
In the past year, 54% of firms purchased consulting services from the same firm that provides their company audit and only 9% say they intend to cease using the audit firm for other services.
But things are about to change. Forty-eight percent of CFOs surveyed think audit firms should be banned from providing consulting services to clients and 48% think companies should rotate audit firms on a regular basis.
"It's a very different environment from nine months ago," said Ed Nussbaum, CEO of Grant Thornton LLP. "Instead of focusing on whittling down our fees, senior executives and audit committees are challenging us to make sure we're doing an adequate job."
One hundred seventy senior finance executives from a variety of industries and company sizes responded to the survey, including 52% who carried the title of CFO or finance director. The complete survey appears in the September issue of the CFO print magazine as well as on the CFO.com Web site. The first survey in the series, CFO Survey of Corporate Financial Planning, was conducted last month.