Falling out of love - auditors and regulators

Theirs is a tale of broken hearts, bruised egos and simmering tension. So much so in fact you would think their name was Miliband. Auditors and regulators are not getting on. Regulators have been slinging some serious criticism at auditors and have been demanding they change their ways – not only their systems but also their behaviour.
The House of Lords have been looking into the problem and the opinions have been flying in for their Lordships.
One of the first comes from John Griffith-Jones, KPMG’s much respected leader.
JGJ argues that there should be no limitations on the information supplied by auditors but the relationship should be governed by a code of conduct – some protocols which formally recognises roles and responsibilities.
This is an interesting proposal and one worth pursuing. But I can see even from here what the regulators’ response might be, where they will see the danger. It is in the framing of such a protocol. It is not too difficult to imagine a scenario where the clauses of such a protocol are drafted in such a way that auditors would be able to say: “That is not our responsibility under the code.” the drafting you see.
Any such set of protocols would have to be written in principles which left auditors clear on where they stood and what was expected of them. The last thing auditors need is to be seen to be directing the creation of a set of rules governing their relationship with regulators which gives them way to many escape routes from supplying the information and testimony the regulators want.
So, in short I like the sound of a protocol but auditors should beware that such an exercise should not be perceived as a very effective way of locking up the filing cabinets and the hard drives.