Accountants back report by regulators
ACCOUNTANTS say they are willing to consider whether the current audit model needs to evolve to meet changing market needs, following a recent report by the Financial Services Authority (FSA) saying that the profession had not been sceptical enough about the financial firms it audited in the run up to the banking crisis.
The City regulator, in a discussion paper published with the Financial Reporting Council setting out the case to give it the powers to publicly censure and fine auditors, has called on the auditing profession to demonstrate that it had learned the errors of its ways since the banking meltdown.
KPMG, Ernst & Young (E&Y), PricewaterhouseCoopers (PwC) and BDO say they weclome the debate.
“We welcome the FSA’s engagement in the future of audit debate and in particular their proposals for more regular meetings and dialogue with the audit profession,” said a spokesperson from E&Y.
The sentiment is echoed amongst the accounting profession, which said that regular meetings with regulators should be a necessity.
But suggestions in the report that auditors face legal obligations to the FSA have some accountants questioning why the financial watchdog should play a larger role.
“The FRC is responsible for accounting standards, so why should auditors face the FSA?” said Graham Clayworth at BDO.
Meanwhile, the Institute for Chartered Accountants of England and Wales (ICAEW) notes that the Treasury Select Committee concluded in a report last year that there was little evidence to suggest that auditors failed in their duties in the run up to the crisis.