French CFO attacks joint audit

The chief financial of officer of one of France’s largest companies has said the joint audit system is no longer fit for purpose now that complex International Financial Reporting Standards have become mandatory.

Thibault de Tersant, CFO of Dassault Systèmes, said: ‘Accounting standards have become more complex and each firm has its own interpretation. It has become very difficult to reconcile the interpretations of two firms.’

The comments on the system, which is mandatory in France, will be seen as a setback for campaigners in the UK who have pushed for joint audit as a mechanism for creating more competition and choice at the top end of the UK audit market. The criticisms of the complexity of audit standards making joint audit impossible may also add pressure to standards-setters.

Mazars partner David Herbinet has pushed aggressively for regulators to look at joint audit as a way of creating more choice in the market, while outgoing Hundred Group of Finance Directors chairman Philip Broadley has also said that joint audit could open up the FTSE 350 audit market. But the proposals have not met with warm comments from the Big Four, who say joint auditing is a recipe for disaster, pointing to the fact that Parmalat was joint audited.

De Tersant also expressed concern about the fruits of the convergence project between the US GAAP and IFRS: ‘I would welcome a single set of accounting standards, but I am not optimistic about convergence. We could end up with the IFRS that is used in Europe and IFRS that would have to conform with the SEC’s version,’ he said.

The Dassault Systèmes CFO’s concerns follow fears from US officials that the convergence project is being rushed. FASB head Bob Herz has warned that rushing convergence will create a dual accounting system, while former SEC accountant Lynn Turner said the US needed to develop a better understanding of IFRS.