WHAT NOW for international financial reporting standards? Addressing the ICAS conference, vice-chairman of the International Accounting Standards Board Ian Mackintosh seemed bowed by the weight of potential projects awaiting the IASB.

Several times, he questioned whether the IASB should wait for the US to come on board - effectively pursuing the convergence agenda - or focus on finishing the standards regardless.

On insurance, he said standard setters "are in a bit of a muddle" as the US disagrees with the IASB's direction of travel and "are at a different stage" in their own standard.

US standard setters the FASB are "on a different page" when it comes to the financial instrument standard and "seem to be heading in a different direction" on hedging, a project the IASB has almost completed.

Is this an indication that the IASB is tired of waiting for the US to fall in line, and will instead prioritise completion of major outstanding projects?

"Even if we don't achieve convergence, we have more than 120 countries already signed up to IFRS, and we must look to our future responsibilities," he said.

These could include conceptual frameworks, research, post-implementation reviews and "big-picture thinking" on how IFRS fits with developments like integrated reporting.

With so much on his plate, perhaps it is small wonder Mackintosh seems tired of the convergence agenda.

But he shouldn't feel too despondent. Barclays' head of financial reporting Hugh Shields remains convinced by global vision, telling delegates: "Only principles-based standards can meet the needs of both business and public interest."

Rules-heavy regimes such as US GAAP "add complexity and encourage financial engineering", he suggested, saying it is harder to deviate from a strongly-based principle.

But there are some conditions for success. Continued training is needed "to avoid breeding young accountants who like ticking boxes". Professionals should be encouraged exercise judgement and take responsibility for it, and above all, "to look at the big picture".

Regulators also have a role to play, Shields warned, saying they must be willing to accept less-than-perfect comparability because "accounting is not a science".

Mackintosh might take comfort from Shields' unwavering support, but the IASB still has a long and potentially lonely road ahead.

WHAT DOES CONSULTATION mean? European commissioner for internal markets Michel Barnier is currently deliberating competition-boosting measures, and mandatory firm rotation appears high on his wish list.

At the same time, US regulator the PCAOB is pondering the issue, recently releasing a concept note on audit firm rotation. Does this mean the two have a mutual goal of pushing it into law?

Barnier's paper went out for consultation last year, and some respondents tried to nix the mandatory rotation clause. Critics claim it will ramp up costs while undermining quality, and company directors bridled at the thought of losing sovereignty over audit.

Despite this, Barnier gives every appearance of clinging to mandatory rotation, perhaps in the belief that nay-sayers have a vested interest in the status quo.

At a speech to the Federation of European Accountants in June, he said: "We need to consider the benefits of making it obligatory to change auditing firms after a certain time period."

Acknowledging concerns that too-frequent changes would damage audit quality, he nevertheless insisted mandatory rotation could be the route to auditor independence.

By contrast, the PCAOB's foray into mandatory rotation might be nothing more than sounding out. The idea is one of several released for consultation in the past year; others include giving assurance on information outside financial statements and requiring engagement partners to sign audit reports.

So what are the implications for the contemporaneous consultations? Was the EC already set on mandatory rotation before it canvassed opinion? Does the PCAOB agree? Or has the US watchdog been swayed by the strength of Barnier's conviction?

Chairman James R Doty told Accountancy Age past experiments in mandatory rotation may have foundered because the time period was too short, suggesting ten years might be more successful. "We have lots to see and hear on the issue," he said.

As yet, there is no way of knowing where the two consultations will land, but we don't have long to wait. November should bring answers from Barnier, and the PCAOB won't be far behind.

THE WORLD of local government audit is in flux. Audit Commission spin-off mutual, DA Partnership, maintains its shadowy persona; 70% of former commission work is out to tender, and the government is busy poring over responses to its recent consultation.

At the centre of all this change, the National Audit Office has been a silent observer. The Department for Communities and Local Government has suggested it take on many former commission responsibilities, but its future role remains unclear.

DCLG has a wish list of jobs for the public money watchdog: prepare the audit codes of practice; consider best practice and value for money; oversee auditing standards and examine the impact of locally administered policies.

This is on top of the NAO's traditional role auditing central government and begs the question, just how far will its influence spread?

As yet, DCLG's plans for who should assume these functions are no more than suggestions, but it seems unlikely that the NAO will turn its back.

A spokesman said the body has "very little to say on the matter" while it is still in discussion at Westminster. However, he confirmed the NAO will not be carrying out local audit, but will "probably" be involved in standard setting.

The Auditing Practices Board has overall responsibility for audit standards, and the Audit Commission has restricted itself to setting codes of practice defining the scope, nature and extent of work.

Does this mean the NAO will simply assume the commission's code setting role, or will it go further? Why doesn't the APB take on both roles? And if the NAO is to oversee auditing standards, are the audit standard setters disempowered?

The codes focus on value for money and require auditors to give their opinion of local government efforts. The NAO has a similar oversight function in central government, and DCLG has suggested the two roles be combined.

MacIntyre Hudson chairman Rakesh Shaunak thinks the NAO has a bigger part to play, suggesting it will become both regulator and commissioner. "As the ultimate custodian of the government purse, it would be logical for the NAO to take on these two strands."

And he could be right, if the recent hiring of former Kent County finance director Lynda McMullan is anything to go by.

The new assistant auditor has 20 years' experience in local government and could lend the watchdog gravitas in post-Audit Commission Britain, allowing it to carve out a central spot in the debate.

NAO chief Amyas Morse (pictured) said McMullan will contribute "her extensive local government experience to our organisation as the importance of local service provision becomes ever clearer. At a time of significant change in the public sector, she will bring a fresh perspective to our work."

McMullan might find herself examining the impact of policies administered by local authorities, another responsibility DCLG is keen to hand to the NAO.

A source close to the issues suggested public finance institute CIPFA could also take on this role. If so, division of responsibilities between the two will be a key question.

With local public audit up in the air, it seems there are just a few things to be sure of. Firstly, DCLG sees a sizeable chunk of responsibilities heading the NAO's way. Secondly, former commission-delivered audits are up for grabs, and the division of contracts could change the audit landscape significantly. Finally, winding down such a big and multifaceted organisation is infinitely complex, and stakeholders must work very hard to ensure nothing falls through the cracks.

FINANCE CHIEFS have one foot in the future and one in the past. Or that was my reading of a roundtable convened by recruiter Badenoch & Clark earlier this week.

About 15 FDs and financial planning pros surrounded a table in deepest Buckinghamshire to discuss the future of finance and the role of the financial professional, in what turned out to be a lively and thoughtful debate.

What is commerciality and do FDs have the right skills to drive success? were among the toothsome topics. Attendees from Santander, Network Rail and others had a lot to say.

Soft skills were in high demand - communication, initiative, and a willingness to "stick your head above the parapet" - were among the coveted attributes, and delegates bemoaned a dearth in today's accountancy talent pool.

For this reason, several had looked beyond traditional qualified number crunchers, hiring people from marketing and elsewhere to fill mid-level finance roles.

No matter how enthusiastic FDs were about these 'outside the box' accountants, they unanimously declared no employee would rise to the top without a full institute qualification.

This dichotomy characterised much of their thinking. Eager to hire bright young things who don't fit into the financial accountant mould, but hesitant to stray too far from traditional calculator-wielding techies.

When asked about their challenges over the next 12 months, the finance chiefs showed how divergent their roles are.

Some were still fire-fighting, intent on cutting costs and dragging their business into the black. Some were already enjoying the first signs of flowering, positioning themselves for post-crunch growth and seeking funding for global expansion.

Still more were struggling to shore up motivation among over-worked staff bowed by the ongoing threat of redundancy, while one was focusing on decentralisation to unlock future success.

It is clear that challenges lie ahead and perhaps awareness is the first part of the puzzle, but FDs and their ilk have much to do if they are to position themselves and their teams for a bright, business-forward future.

INTERNATIONAL FINANCIAL REPORTING standards are on everyone's mind. Standard setters the IASB are running out of time to complete the last few crucial rules before the December deadline for US convergence, while UK equivalent the ASB is elbow deep in a consultation on IFRS for SMEs (FRSME).

Companies are interested because changes materially affect their business, and accountants are with them every step of the way - but how are the firms faring on the back of IFRS-inspired changes?

FTSE leaders switched to global standards in 2005 and smaller AIM-listed clients have since shifted over. Their accountants have been enjoying the fruits of this transfer, but do smaller firms have a seat at the table, or are they still waiting for IFRS cash and experience to drift their way?

Mid-tier firms say no. Andrew Minifie, general practice partner at 14th-largest firm Haines Watts, said the benefits of IFRS-related work are not restricted to the Big Four. "Many mid-tier firms do have experience of IFRS and can carry out consultancy work for clients," he observed.

Minifie conceded that the largest firms often have more experience of the global standards and this is "helpful" when it comes to winning clients, but said Haines Watts has already taken on IFRS-related work and is well placed to do more.

Conversely, he said IFRS issues might stop would-be entrants to the listed market, as it could be difficult for firms to gain the experience necessary to work on IFRS while only dealing with smaller, UK GAAP-using clients.

MacIntyre Hudson chairman Rakesh Shaunak was positive, saying leading firms outside the top six are fully prepared for IFRS. "We are up to speed technically - we have a team of experts, we train our clients, we convert accounts to IFRS - we are ready."

However, he conceded that the biggest firms have a head start due to the size of their clients, saying it is a "knee-jerk reaction" to seek out accountancy giants for IFRS-related work.

Despite this, experts are convinced it will not be long before the revenue and experience benefits of the new standards trickle down through the echelons of accountancy.

David Wood, technical director at ICAS, said they are "already filtering down", pointing to the ASB's FRSME consultation as evidence of smaller firms' increasing need to engage on IFRS.

However, he did concede that "clients will go where the expertise is". Complex companies may be more likely to call on the big six due to their sector-specific knowledge, whereas smaller competitors could struggle in some areas.

Kathryn Cearns, technical accountant at Herbert Smith, agreed that IFRS benefits will envelop smaller firms eventually, and said they already enjoy some advantages to make up for the early IFRS windfall enjoyed by the big six.

Rules surrounding the delivery of non-audit services are more relaxed when it comes to non-listed companies, she said, adding: "Mid-tier firms service a different market for different reasons."

Price advantages could also help smaller firms when it comes to delivering IFRS consultancy work, with relatively simple businesses such as manufacturers potentially tempted by cheaper accountants.

Complex companies such as banks and insurers will almost certainly stick to the top firms, however, as these are the only ones with the necessary experience.

Few stakeholders seem minded to claim that IFRS has widened the gulf between the top six and mid-tier firms. Smaller market participants are keen to appear ready and able to take on the challenge, while other stakeholders insist any advantage is only temporary.

ReesRussell partner Jonathan Russell was more strident, claiming IFRS changes "have been an area where the big firms have further differentiated themselves from the smaller firms". He concluded: "They have used it as yet another mechanism to further inflate their charges while smaller firms have just taken them in their stride as another regulatory change which clients expect their accountant to deal with as a part of their usual service."

Pricing arguments aside, it seems clear that, thus far, IFRS has added more to the coffers and CVs of the biggest firms, with mid-tier accountants jostling for crumbs at the edges.

If the ASB pushes for FRSME at the end of the current consultation, the mid-tier will have much to do helping their clients action the changes. However, for value-added services and the complex IFRS-related tasks, the top six could yet retain the edge when it comes to cashing in on the global standards.

THE WORLD of accounting standards increasingly resembles a mush of new and old rules, half converged GAAPs and ongoing revisions.

Global standard setters are straining valiantly towards convergence with the US and in the meantime, their domestic peers are updating local GAAPs and helping companies stranded in the no-man's land between.

What does this mean for international businesses? How do the HSBCs and the BPs of this world reconcile accounts from far-flung jurisdictions without getting in a mess - or a huge bill?

One answer could be accounting hubs. Proponents say these one-stop-standard-shops suck in numbers from transactions around the world and spit out perfectly reconciled accounts that are comparable, transparent and standard-compliant.

They work by divorcing the processing of data from the generation of the accounting event, meaning users can control their financial reporting precisely and, in theory, turn out perfect audit trails.

And some banks may already be using them, unbeknown to customers who like to think financial institutions are perfectly equipped to crunch their own numbers, thank you very much.

One Big Four voice said banks are reluctant to admit they use a hub, for fear of publicly branding their accounts as an unwieldy mess. One notable exception is Swiss Re, which began using the Microgen offering last year. Other banks could also be interested, as once in place they might make financial reporting faster, cheaper and a whole lot less painful.

It's installing them that could be putting off would-be users right now. Banks were early IT adopters and consequently, have a long legacy of programmes, systems, half-remembered rules and re-imagined processes, all of which would have to be reconciled for an accounting hub to work.

Inputting one product system on to a hub should take between one and two months, meaning transferring the accounts of an international entity could be incredibly time consuming. The first step would be analysis of existing systems, and extensive risk-testing would be essential before launch.

Of course, to enjoy maximum benefits companies would have to run multiple systems through the hub, extending the time and cost involved in transfer. The pay-off, supporters say, would be a much higher level of control over group and individual accounts.

Once businesses have made this leap, producing financial reports might be a doddle. Changes to accounting standards could be incorporated into the hub, making IASB deliberations a less worrisome prospect, and the process should be much less staff- and cash-heavy.

Providers such as Microgen, Oracle and SAP are clamouring for converts to the accounting hub. One expert said for any significant shift towards widespread use, regulations would have to change.

If the regulatory framework tightens, potentially requiring companies to rapidly churn our transparent, comparable accounts, finance directors might turn their thoughts to a hub. The ability to easily demonstrate each step of consolidating every account of an international behemoth is undoubtedly attractive; one commentator said: "If you were starting a new bank you'd undoubtedly put in a hub."

Theoretically useful to banks, are there any other sectors that would benefit? Our Big Four expert wasn't sure of the case for wider business, but conceded insurance companies might see the advantages.

It looks like accounting hubs are an interesting theory, and standard-weary FDs might be tempted by the apparent simplicity they offer. But with the huge challenge of transition, lack of role models and associated stigma, it might be a while before we see users queuing up to tell their accounting hub success stories.

LAST WEEK'S Audit Inspection Unit reports threw light on work at the top six firms, and optimists said they showed slight improvement.

A sub-board of the Financial Reporting Council, the AIU said this year's findings pointed to "as good, or even slightly better" audits, and institute members agreed they are "happy" with the results.

However, the AIU itself said it was hard to identify trends from such a small pool of reviews, suggesting celebrating 'as good or better' results - despite the number of unsatisfactory audits climbing - is a step too far.

Director Andrew Jones had ready excuses for the firms' continuing weakness in certain areas. Their size and de-centralised structure made it hard to achieve root-and-branch improvement, he said, while in some cases, last year's AIU recommendations had not yet filtered through to audits in the most recent review.

The ICAEW too was quick to offer explanations for shoddy audit work. Executive director of professional standards Vernon Soare described the problems as "isolated incidents" that are "not worrying" and "certainly not indicative of systematic or endemic failure".

This is despite the fact that year in, year out, the top six struggle to dissect management claims with appropriate scepticism, and are universally pulled up on tricksy issues like fair value and goodwill impairment.

When the two prongs of industry supervision - institutes and the FRC - are lining up to pat firms on the back for their lacklustre audit reviews, stakeholders should be worried.

Oversight and retribution are currently shared between them, and a forthcoming FRC consultation could see even more power concentrated in institutes' hands, as the Audit and Actuarial Disciplinary Board is considering offloading some of its responsibilities onto the ICAEW and its ilk.

When accused of a curious willingness to defend the firms, Jones said the AIU will not tolerate poor audit work, and is "holding firms' feet to the fire by going back review their work". He pointed out that the public reports are just the tip of a finger-wagging iceberg, and a much more detailed review is sent to the firm in question and its clients.

Vernon Soare displayed a similar confidence in audit inspectors, saying the body has been delegated power by the secretary of state and "has a serious job to do". He argued overseers often struggle to demonstrate objectivity but nevertheless, it would not be in their interest to 'find' improvements without supporting evidence.

The recent Office of Fair Trading decision to refer audit to the Competition Commission gave institutes another chance to nail their colours to the mast. CIMA said the market is "currently competitive", making the referral "arguably unnecessary under present circumstances". The ICAEW and ICAS were similarly reticent, questioning whether the commission had the teeth to impose successful remedies.

With the rest of the profession lining up to demand greater competition and investors concerned about Big Four market capture, the reluctance of industry bodies to get behind the zeitgeist is telling.

Institutes need the big firms to put graduates through their training programmes - just ask the ICAEW, which lost Ernst & Young learners to ICAS in 2000, reducing its student count by around 400 a year. This could make them reluctant to go against firms' best interests, and must make them think twice on touchy issues like competition.

The FRC too has been accused of regulatory capture, as it fills its boards with current and former members of the accounting elite. Accountancy Age recently reported on new appointments to the Financial Reporting Review Panel, of which a comfortable six in 13 came from the Big Four.

The plurality of institutes plus the FRC and its various boards are often cited as proof of thorough and overarching industry supervision. However, with top firms heavily over-represented on the regulatory scene and a complex web of funding and inter-dependence linking the various bodies, it is arguable that the pluralistic landscape is just variations on a theme, with no true independence or will to scrutinize problems.

Of course, top accountants make their way to firms' highest echelons, and it is these minds that we want working on tough issues like audit standards and regulation. However, their value is arguably diminished when the institutes and FRC boards resemble an old boys knees-up, and we should bear this in mind when examining the trappings of regulatory oversight, of which the AIU is just one feature.

NEWS CORPORATION'S audit committee found itself unexpectedly dragged into the spotlight on Tuesday, as the UK tuned in to watch the Murdochs and Rebekah Brooks get a parliamentary grilling.

Normally busy behind the scenes, the audit committee's activities are rarely the focus of much attention, unless something has gone very wrong. The whole of News Corp is probably feeling rather hot under colour, but this bunch was among those singled out in the moguls' defence of their hackneyed empire.

Rupert Murdoch (pictured) said the company has "a very strong audit committee" which would know about sums paid for civil litigation, such as out-of-court legal settlements stemming from News of the World misdemeanours.

Does it follow, therefore, that they would - or should - have known about cash being filtered off for other nefarious purposes?

Murdoch does not directly suggest this, but he does use the audit committee as another rivet in his "delegation" shield, arguing that as the tsar of a multinational behemoth, he trusted others to keep an eye on such things for him.

By denying that he should be aware of legal payments "because the audit committee would know about this", Murdoch shines a light on executive insight. Who should be aware of goings-on now considered unacceptable, and who should be aware of payments to fund them?

Paying private detectives is an accepted newspaper practice and at NOTW, generous cash expenses were not uncommon, potentially making it hard to lay the burden of responsibility for knowing about bribes or hacking at executives' feet.

Son James touched on the issue, saying: "Alleged criminality [and] violations of our own code of conduct ... are the things that the audit committee [and] senior executives expect to be made aware of".

Mini-Murdoch insisted upon "thresholds of materiality", saying issues have to be of a certain magnitude before top-level management takes an interest. It is arguable that this also applies to audit committee work, meaning relatively small sums could be hidden from them, but large, unexplained payments would be more likely to ruffle feathers.

Whatever the true situation, there is no doubt that members will strenuously deny knowledge of payments to private dicks and police officers. However, the case may make audit committees sit up and take note, as it appears no one is safe from the flames of a corporate funeral pyre.