Amid chatter in capital markets calling into question the value of public company audits, Deloitte found through a recent survey that C-suite executives and audit committee members use insights gleaned through the audit to improve performance and operational processes.
The Big 4 firm’s survey of 300 chief-level executives and 100 audit committee members revealed almost 75 percent of the executives and 91 percent of audit committee members use the financial statement audit to identify opportunities to improve business performance.
Similarly high numbers among both groups reported they believe financial statement audits provide valuable business insights. Even further, nearly 80 percent of executives and more than 90 percent of audit committee members said they would expected improvement in company performance if audit findings are communicated in a clear, simple manner.
The survey also sought to assess whether companies that consistently utilize information provided through an audit are more likely to achieve positive growth rates. Nearly one-fifth of such companies said they were more likely to achieve growth over the next three to five years, and 47 percent characterized the growth potential in even stronger terms.
As the post-Sarbanes-Oxley era of regulation over the audit profession has evolved, audit firms have faced stiff criticism over audit quality to the point where some are questioning whether audits should even be a mandatory requirement for public companies. PCAOB Chairman James Doty has delivered speeches pleading the importance of public company audits.
“We wanted to check in and understand the perspectives of our clients — the CFOs, audit committee members, executives in the C-suites — and get their views on the value of the audit,” said Adam Weissenberg, national managing partner at Deloitte. “No one is asking the question, so we wanted to get some perspective on that.”
Weissenberg said he found the results encouraging for the audit profession. “It reflects that there is a real reason for audits,” he said. “Clients are saying we get value from this and we appreciate your insights to tell us things we didn’t know about the business.”
The results also suggest those audit stakeholders could do more with audit results and their interaction with auditors than they do currently, said Weissenberg. “The ones that took advantage of auditor insights had higher growth than the ones that didn’t,” he said.