Auditors get high marks, but non-US market optimism sags

Retail investors’ confidence in audited financial information has risen to near record highs, but confidence in markets outside the United States has plunged, according to a yearly Center for Audit Quality (CAQ) survey released Wednesday.

The 2019 Main Street Investor Survey found that 78% of U.S. adults with at least $10,000 invested in the capital markets through retirement plans or direct holdings said they have at least some confidence in audited financial information. That’s a rise of three percentage points over 2018, and it’s tied for the second-highest confidence percentage on record in the survey, which began in 2007.

Meanwhile, 83% of investors said they have at least some confidence in independent auditors of publicly traded companies to advance investor protection. That’s an increase from 81% the previous year, and auditors were the group that was most trusted by investors to protect their interests.

Independent audit committees of public companies (81%), financial analysts (81%), and financial advisers and brokers (78%) were the other leaders among groups trusted by investors.

The most common reason cited by those who have confidence in audited financial information was the belief that auditors provide honest and independent third-party scrutiny.

“We hope these survey results inspire and motivate public company auditors and others throughout the U.S. capital market system to fortify the foundation of trust and confidence that is so important for our capital markets,” Julie Bell Lindsay, the CAQ’s executive director, said in a news release.

The CAQ is affiliated with the AICPA.

Just 47% of investors expressed at least some confidence in markets outside the United States, down from 56% in 2018. Those who lacked confidence in non-U.S. markets most commonly said they don’t have confidence in governments outside the United States or they believe that other countries’ economies are not doing well.

Almost three-fourths (74%) of respondents — the same percentage as 2018 — said they have at least some confidence in U.S. capital markets. Their top reason for optimism was the belief that the U.S. economy is doing well.

Other results from the survey include:

• 76% of respondents expressed at least some confidence in U.S. publicly traded companies, a decrease of two percentage points from 2018.
• Investors identified the growing national debt, U.S. trade policy, and corporate corruption as the greatest risks to the U.S. economy and capital markets. Among 10 risks considered, the one that concerned investors the least was climate change.
• Men were more confident than women in audited financial information. Almost half (46%) of men said they had quite a bit of confidence or a great deal of confidence in audited financial information. Slightly more than one-fourth (27%) of women expressed that level of confidence.

— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.