Audit process should be 'shielded'
The audit process should be 'shielded' from any long-term pressures caused by non-audit services so that the independence of accountants' can be maintain, according to Chris Dickson of the Joint Disciplinary Scheme
In a piece written exclusively for Accountancy Age, Dickson, the executive counsel for accountancy watchdog the Joint Disciplinary Scheme, said rather than ban the practice of firms providing non-audit services to their audit clients, ‘serious consideration’ should be given to the idea of ‘compulsory rotation of the audit firms of listed companies – perhaps every five years’.
He said the ‘knowledge that another firm must take over after a fixed period’ was likely to encourage a ‘more searching and sceptical audit’.
Implementation of a rotational audit, could be achieved by chief financial regulator the Financial Services Authority, which recently took on the responsibility as UK listing authority, Dickson said.
The idea of auditor rotation has once again come into the public eye following the collapse of Enron. But the issue was raised as far back as the Maxwell scandal, although the idea has been poorly received by those within the profession.