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ACCA accountants 'back proposed EC audit reforms'
Accountancy News |
15/12/2011
The value and quality of audit must be enhanced across Europe, according to the Association of Chartered Certified Accountants (ACCA).
Commenting on recent EC legislative proposals, the organisation said it is important to restore society's confidence in the ability of audit to add value to corporate activity.
ACCA is now calling for "a constructive dialogue" with EU decision-makers and all stakeholders to ensure that final audit measures can deliver the maximum benefit for businesses across the continent.
Sue Almond, technical director at ACCA, said it is "widely acknowledged" that statutory audit plays a pivotal role in business.
She noted that it promotes the causes of transparency, accountability and sound financial management, and helps to deter financial wrong-doing.
"But it is also widely accepted that the social benefits of the independent audit need to be periodically re-examined to assess whether the process continues in practice to meet the evolving needs and demands of not only users and investors but also of the wider economy and society generally," Ms Almond added.
ACCA members broadly support many of the ideas put forward by the Commission aiming at improving audit quality and independence.
The corporate governance elements of the proposals, such as an enhanced role for audit committees, the appointment of the auditor, and greater diversity in the audit market, were welcomed by members in particular.
Accountants also backed the EC's proposals to forbid restrictive covenants and provide legally-binding ISAs throughout the EU, including for small businesses with proportionate international standards.
However, concerns were raised regarding the fact that determining proportionality is left to member states, which could result in further market fragmentation with 27 different audit rules.
ACCA members also welcomed the willingness to improve communication through more effective dialogue between auditors, audit committees, regulators and supervisors.
But opinion was split on proposed measures linked to market structure such as mandatory auditor rotation after six years.
Members instead expressed their support for the existing internal rotation of partners, large 'audit only' firms and a blanket ban of non-audit services to audited clients.
MEP Sebastian Valentin Bodu said the EC must be careful not to link the independence of auditors and the financial crisis.
"An auditors' job is to assess financial reports, they are not in charge of assessing risky financial products," he argued.
"In addition, auditors are professionals, and like other regulated professions such as lawyers or doctors, they should have the ability to be monitored by their own professional bodies according to their codes of conduct and ethics."
Posted by Stephen Wilkinson
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