The ICAEW has broken with tradition by allowing a publicly-listed company to employ practising auditors.
In a move that could spark fresh audit independence controversy, regulators at the institute have come to an agreement with Levy Gee-led accountancy business consolidator Numerica that will allow it to employ auditors.
Numerica floated on the Alternative Investment Market this week raising #30m. Its business model includes the AV Audit arm, described as being ‘owned by responsible individuals who will work part-time for AV Audit and part-time for Numerica’.
AV Audit is owned by former partners of the three firms acquired by the group; Levy Gee, NMGW and Jayson Newman. The ICAEW said there had been no audit independence compromise. In a statement, the institute said ‘it was aware of the arrangements’.
It added: ‘Numerica has undertaken not to accept assignments which would be prohibited under the ethical guide were it and AV Audit one firm, and satisfactory procedures are in place to ensure that no breach of the independence requirements should arise.’
Rules against listed companies acting as auditors exist to prevent shareholders exerting any influence over auditor objectivity.
The only comparable recent case is that of Tenon. Blueprint, an organisation which Tenon says is run at arms-length, has been set up to provide audit services. But the company published a press release describing Blueprint as ‘Tenon Audit’. An ICAEW spokeswoman said: ‘Tenon has agreed to ensure the distinction is made clear between the two companies in any future publicity.’
– Turn to page 3 to read about Numerica’s flotation and leader, page 14.
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