Institute pushes JDS power
New regulations to force overseas firms working for UK auditors to co-operate with the Joint Disciplinary Scheme are being considered by the English ICA.
John Collier, chairman of the Practice Regulation Directorate, told council last week that the institute had taken legal advice on the options available to it. These include threatening to withdraw the audit registration of firms whose foreign sub-contractors refuse to hand over working papers to the JDS.
Collier was responding to an earlier warning by leading council member Douglas Llambias that a JDS investigation into KPMG’s role as auditor to International Signal and Control, a subsidiary of defence contractor Ferranti, had highlighted weaknesses in the scheme’s powers.
The JDS investigated KPMG after Ferranti crashed in 1992 when fraudulent contracts at ISC, worth u100m, came to light. This July KPMG was cleared of any wrong-doing.
Llambias had complained in August’s council meeting that the JDS investigation had been held up by more than a year, and cost an extra u100,000, because KPMG’s US arm had refused to hand over working papers.
He suggested English firms should introduce a clause in their contracts requiring their overseas sub-contractors to co-operate with the JDS.
‘This stable door must be closed quickly,’ Llambias told council. ‘If the JDS does not have the power to investigate, then let’s close it down – it’s a waste of time,’ he added.
