More rules await dealmakers

But reporting accountants will have to grapple with yet another set of
regulations when the Auditing Practices
(APB), led by executive director Jon Grant, releases a new ethical
standard for due diligence teams at the end of the month.

The new guidance, which will be known as
ethical standard for reporting accountants (ESRA)
, will specify a set of
rules that reporting accountants will have to follow when working on initial
public offerings and corporate takeovers.

The introduction of ESRA is part of the UK’s plans to harmonise its
regulations with those in Europe.

Dealmakers have acknowledged the importance of creating a robust ethical
standard for reporting accountants to follow.

Concerns have been expressed, however, about the practicality of some of the
requirements included in the APB’s original draft of the standard.

Peter Hughes, head of independence at Big Four firm
KPMG, says a particular area of
difficulty occurs in takeover situations where the reporting accountant is not
the auditor.

‘Independence is not an absolute, and all firms have many relationships,’
Hughes says. ‘In a fast-moving and confidential transaction environment, the
reporting accountant cannot spend months trawling through its whole global
network to confirm that it is independent. The provisions of ESRA recognise

Related reading

PwC office 2