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0:00
Hello. This is David Hay,
Professor of auditing at
the University of
Auckland, New Zealand.
This is the first of 10 talks
on the principles of auditing.
In this first talk,
we're going to give you
some background information
about auditing,
the business of auditing,
and the way people
perceive auditing.
0:16
Think about the firms that
provide auditing services.
Some of them are quite
well-known and prominent.
But they're also rather strange.
Strange because they're
not corporations
as we usually see them,
and strange because they're
not the multinational
organizations that
they might seem to be,
and they're also
widely misunderstood.
They prepare their reports in
a very standard
format, nevertheless.
But there is something called
the audit expectation gap,
where people widely
misunderstand what
auditors are doing.
That gap is about the
difference between
what auditors think
they're doing
and what the users of
the financial reports
believe that auditors are doing.
It's quite a wide gap, and
it has quite major effects.
So I'll introduce
those topics today.
0:58
The four major audit
firms Deloitte,
EY, KPMG, and PwC
are very well known.
They don't publish full sets
of accounts like a
corporation would,
but they do publish
some information.
Most of these firms produce
a global transparency
report of some kind
which tells us a bit
about their revenue,
their activities,
and their people.
From those, we can
see, for instance,
that Deloitte Global has a
revenue of $67.2 billion,
of which auditing is
only $12.8 billion.
Auditing is about a
fifth of their business.
Not long ago, the firms were
mainly involved in
auditing activity.
But recently their
consulting activities
have grown enormously.
That's an important thing
about understanding them.
Another one of the firms, PwC,
reports $55.4
billion of revenue.
When it talks about its staff,
it says there are 370000
professionals, as they call them,
working for the firm in about
149 different countries.
The big four firms all have
similar organizations
with large turnover,
similar very large organizations
and lots of people.
