Independent auditors should provide investors with more information, highlights Amec’s CEO

Independent auditors’ opinions rarely innovate: they are often unqualified reports that only identify the processes implemented by the companies. In general terms, auditors are too neutral and “restrained.” During an event organized by the Brazilian Institute of Corporate Governance (IBGC) in Rio de Janeiro, on March 19, Amec’s CEO Mauro Cunha stated that auditors should be more assertive and give opinions about the companies’ choices.
Cunha highlighted that the adoption of the IFRS provided managers with more freedom to evaluate the company’s assets, transforming financial statements into something close to “sell side” reports. Accordingly, independent auditors should adopt a posture different from that they had in the past and give additional opinions. Cunha also stressed that although audit committees are essential bodies, they should show they are efficient as many times auditors eventually serve only the CIOs’ interests.
Mark Babington, Director of Audit Policy at the Financial Reporting Council (FRC), UK’s audit regulator, said that the United Kingdom started to demand a more critical posture from auditors, mainly when it comes to highly subjective issues – such as asset impairment. He highlighted that auditors should request that officers show the data on which they based their conclusions instead of simply accepting them.
From the managers point of view, it is necessary to understand the work developed by external auditors and their limitations, says João Laudo de Camargo, partner at the law firm Bocater, Camargo, Costa e Silva, Rodrigues Advogados. Officers usually claim they are not aware of frauds and use the audited reports to defend themselves. However, it’s important to remember that independent auditors’ work is based on sampling approaches and that they can make mistakes, not exempting senior executives from establishing good internal controls.