Auditors’ foremost obligation is to uphold public interest: Larry Bradley, KPMG

economictimes.indiatimes.com:

Auditors foremost obligation is to uphold the public interest, backed by audits granted through statutes, and the firm reserves the right to refuse work for companies that do not meet essential standards of personnel treatment, governance, controls, and cooperation, said Larry Bradley, Global Head of Audit for KPMG International, on Big Four firms refusing or walking away from risky audits. In a chat with ET, Bradley talks about the efficacy of joint audits, concentration risk in audits, and the best way to regulate the profession.

Edited excerpts:The RBI has mandated joint audits for some financial institutions in India. Do they really enhance audit quality? Joint audits have been discussed and implemented in various situations, notably in France, where they are a part of the business culture for decades.

The European Union has considered mandating joint audits but has consistently decided against it, allowing voluntary participation. However, there is no concrete empirical evidence indicating that joint audits enhance audit quality.

Different definitions of joint audits exist, with some governments viewing it as a division of responsibility rather than a true joint audit. Ultimately, no independent or objective evidence supports the claim that joint audits significantly improve audit quality.The Big four firms are de-risking their audit portfolios and not signing any risky audits. Isn’t this practice contributing to an elevated risk environment within the market? A key concern among global audit regulators revolves around whether the profession or the Big Four are effectively de-risking our portfolio, aligning with the point you're addressing.