Protiviti: Internal accountants lacking means

12 February 2010 Consultancy.uk

Internal accountants find they do possess insufficient means to work effectively. Above all, in the period in advance of the credit crisis, they focused on the wrong risks. This can be concluded from a recent research by internal audit and risk management advisory firm Protiviti.

Only fourteen percent of the auditors interviewed think their internal audit department gives their people enough means to fulfill agreements from the audit chart. Two-thirds of interviewed members pointed out that the department possessed too little knowledge and skills to work effectively. Forty percent declared they have focused on the wrong risk prior to the credit crisis.

According Sukhdev Bal, CEO at Protiviti, internal auditors have to keep on schooling themselves in order to be able to follow new developments.

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"There needs to be a clear understanding of the evolving role, requirements and expectations of internal audit. Internal auditors must continue to enhance their skills and educate themselves on new technologies and competencies that will be required by their organizations in the months and years to come."

Bal also thinks audit boards, managers and internal accountants should cooperate better to realize a well-functioning internal audit execution.

"Audit committees, Internal Audit leaders and management need to work more closely and collectively to agree the role of audit, objectives, criteria for audit and the overall approach of the internal audit function required to meet current and future evolving needs."

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Deloitte wins CRH role from Big Four rival

14 March 2019 Consultancy.uk

Big Four professional services firm Deloitte has secured a new contract as the external auditor of construction industry manufacturer CRH. The firm will replace rival EY in the role as of 2020.

Formed from a merger of Cement and Roadstone in 1970, CRH is an international group of diversified building materials businesses which manufacture and supply of a wide range of products for the construction industry. The company is incorporated and domiciled in Ireland, where it ranks as the largest Irish company.

Since 1988, the firm has been audited by Big Four firm EY; however due to the length of its tenure as well as the firm’s sizable non-audit work for CRH, it was decided the time was right to find a new auditor. In 2018 CRH paid EY £1 million in non-audit fees, representing 6% of the £17.2 million in total fees it paid to the Big Four firm for the year.

Deloitte wins CRH role from Big Four rival

In its 2018 annual report, CRH noted that the audit committee conducted a competitive tender process in which three firms were invited to apply. EY was not invited to compete in the tender process, and eventually its Big Four rival Deloitte was chosen to replace the firm as external auditor for the FTSE 100 building materials provider. The evaluation was done on a “fee-blind basis”, in which fees are negotiated after the appointment has been decided.

The new contract for Deloitte will begin from 2020 onwards. According to CRH’s report, the decision is no reflection on EY’s performance as auditor, with the company stating this “did not compromise [EY’s] independence or integrity."

“[While] the Committee appreciated the quality of the proposals presented by all the firms, it believes that the strength and experience of Deloitte’s team best met the predefined criteria it had set,” the report added.

While it is common for Big Four firms to replace one another when it comes to large auditing contracts, the switch comes at a delicate time, when the domination of the market by the quartet is under intense scrutiny in the UK. Last year, the UK’s fifth largest accounting and advisory firm Grant Thornton withdrew from bidding for FTSE 350 audit tenders, which it claimed cost the firm as much as £300,000 an attempt, while rarely yielding a new contract. The move sparked multiple calls for a competition probe, with critics suggesting the Big Four’s stranglehold was compromising the integrity of the auditing industry.