ICAEW attacks FRC reforms

The ICAEW has broken with its tradition of quiet diplomacy to attack recent reforms at the Financial Reporting Council, which it says could undermine the profession’s disciplinary processes.

ICAEW executive director Vernon Soare warned this week that the FRC’s suggestion to remove the requirement to consult recognised supervisory bodies on disciplinary matters would remove an important element of accountability.

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Comments

Audit    1 thanks

reilloc | | Permalink

If the audit profession wants to restore public and political confidence in the profession they need to embrace reforms that are far deeper and wide-ranging than those discussed here! Ten year tendering of audit will do nothing to remove the perception that audit companies are far to close and cosy in their relationships to the big companies that they audit.
Many years ago I worked for a company that performed Assurance on designs for plant at Sellafield. We would bend over backwards to avoid stating that buildings had safety issues. why? Because bnfl paid for our services and would stop using us if we stirred things up.
As far as I can seen the same situation applies to audit work.
To restore public confidence, I think we need to randomly assign auditors to companies every three years. We need a fee structure that is fixed based on size, profit and company structure.

mr. mischief's picture

the reek of the vested interest    1 thanks

mr. mischief | | Permalink

All manner of really dodgy auditing has infected banks and other businesses in the last 5 years.  Now the great vested interest ICAEW gets irked that it's useless policing of the top guys is being challenged.

Strict Liability

As well as supporting the last post, I want to see strict liability.  If every fat cat audit partner knew that if the company entered serious difficulties within 12 months of a clean audit report, he or she would be deemed negligent with heavy penalties and possibly jail unless they could prove otherwise, there would be an explosion in qualified reports.  In turn, the dodgy directors would clean up their acts because they'd fear the qualified audit report.

In my career, plus those of fellow accountants I personally know, the profit impact of questionable audit reports is approximately

£30 Billion

In some cases, PLCs went bust within 12 months of a clean audit report.  £30 Billion from the immediate personal contacts of one accountant.  Ridiculous.

Crooks by another name.  Auditing is rotten to the core.  The guys from the 1850s who got the profession started will be spinning in their graves.

carnmores's picture

big companies

carnmores | | Permalink

send out trainees paid £15-20 ph and mark them up to >£100 ph and ask them to fill out loads of forms, is it any wonder they dont know whats going on half the time

are some huge companies simply to big to audit

no cross selling

is tendering any good?