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Reputability LLP are thought leaders in the field of reputational risk and its root causes, behavioural risk and organisational risk. Our book 'Rethinking Reputational Risk' received excellent reviews: see www.rethinkingreputationalrisk.com. Anthony Fitzsimmons, one of its authors, is an authority and accomplished speaker on reputational risks and their drivers. Reputability helps business leaders to find these widespread but hidden risks that regularly cause reputational disasters. We also teach leaders and risk teams about these risks. Here are our thoughts, and the thoughts of our guest bloggers, on some recent stories which have captured our attention. We are always interested to know what you think too.

Monday, 24 January 2011

The demise of Audit?

It is clear from today's FT at  that the big four accountants fear collapse to the extent that they are discussing contingency plans.  The discussions centre on how to re-boot a new company as a phoenix from the ashes of the old.

As the demise of Arthur Andersen illustrates, any sign of 'rotten' sends clients running elsewhere - what is the value of an audit certificate from a malodorous firm?  The suggestion from John Griffith-Jones of KPMG, that 'regulators might need to compel clients to stay with a stricken auditor temporarily', is therefore particularly striking. 

But the discussion should not just be about whether and how a big audit firm can rise like a phoenix from its own ashes.  It should include whether audit as we know it would survive as a business after the destruction of a Big 4 audit firm.  That one has been filed under "Too Difficult". 

Update: See also Lex on 24 February 2011

Anthony Fitzsimmons
www.reputability.co.uk

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