Level of disclosure is ‘inadequate’

Quoting a figure of 71% from ProShare’s own survey, the company’s chief executive Diane Hay questioned the reliance on accounts, ‘when apparently healthy companies, with unqualified audit reports turn out to be so sick they cannot survive’.

Doubts over the veracity of auditor reports have come to light in recent months, following the collapse of apparently healthy US energy giant Enron, and other corporate disasters.

Hay said private investors had only one ‘independently examined information source – the annual audited accounts’ and expected this to be some kind of ‘guarantee that the company is in some sort of healthy state’.

She called for the report to be widened in scope.

But Accountancy Age news editor Gavin Hinks said that there were many issues to consider.

He said auditors would argue that there ‘hands are tied and that client confidentiality restrains them revealing more’.

‘The real problem they (auditors) might claim is ensuring company directors reveal everything to the auditors.’

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