Understandability and Transparency of the Financial Statements of ...

The following quotation illustrates this problem in relation to a charity which had assets
of NZD600,000 and income of NZD650,000. The charity went from an audit fee of
NZD4,000, a fee actually on the low side, to an audit fee of NZD750. It should also be
noted that the charity‟s new auditor and the charity are at opposite ends of the country
and the interviewee advised that she had not met the auditor personally:
They‟ve [the previous auditors] got very fancy letterhead and they seem to be
something … And we were paying them a fortune [NZD4,000]. And a guy, one
our Board members, said oh, this is a ridiculous amount to be paying to the
auditors, would you like to use our auditor? So, oh yes, that‟s a great idea.
(Interviewee 20 B)
With all the bad examples it was heartening to find examples of competent auditors who
were excellent examples the auditing profession should emulate:
They [current auditors] know what to look for, so they come in and ask the right
questions and they‟re actually looking in the right places for the things that you
know that they should be looking for. (Interviewee 29 MB)
And most of these audits that you get asked to do, have significant problems
because they do not comply with all sorts of issues and are you going to insist on
full compliance with all these requirements, or am I going to insist on some
minimum level of requirements that I‟m comfortable with. You just get into
difficult, ethical situations which probably you‟re better off if you don‟t even
know about them. But if you do know, you can‟t ignore them. And the audit
reports don‟t comply with the auditing standards either. (Interviewee 11 BTA)
Every time I hear from a client “Oh, we‟re a very simple and straightforward
organisation” and you‟re asked to quote on it, why is it so much? It‟s because
I‟ve been burnt so many times before. And I‟m a lot harder now about that. I‟m
not anywhere near as apologetic as I used to be about what we charge because I
am so used to being burnt, it‟s 99% of the time. (Interviewee 18 A)
As Fisher (2007a, p. 23) highlights:
In the past many [charities] have relied on finding a friendly chartered
accountant who is willing to perform an audit on an honorary or semi-honorary
basis. Potential auditors are also deterred by an increase in professional
liability and risk; that concern applies equally to non-paid engagements.
Some Auckland auditors have identified the need for training and have set up the
Auckland NZICA Audit Special Interest Group which have speakers come in and
explain various matters of importance. At one meeting that the researcher attended, the
presenter asked who had read a particular audit standard. This audit standard was the
key standard for audit planning, which the presenter considered should take at least one-
third of audit time. Out of seventy people, three, including the presenter and the
researcher, had read the standard. Compounding this is the fact that many auditors do
not see the necessity of up-skilling, which was remarked upon by one interviewee: “The
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