Ward leaps to defence of IFAC

The head of accounting’s global body has hit back at fierce criticism from
investors over the creation of audit standards they claim will severely damage
audit quality.

Graham Ward, president of the International Federation of Accountants, told
Accountancy Age that arguments put forward by investors that global
audit standards were too rules driven and designed to placate the US were
‘deeply flawed’.

‘We’re not in a position where we can be dominated by the US at all. We’ve
got 18 members of the IAASB (IFAC’s standard setting body) and only two of them
are from the US. Three are from the UK,’ he said.

Concerns over the impact International Standards on Auditing will have on the
UK audit process had led investors to withdraw their support for a clause in the
company law reform bill that would enable accountants to negotiate proportionate
liability with their assurance clients.

Other investors have claimed that the standards were created to satisfy the
interests of the Big Four and help reduce the firms’ risk exposure. But Ward
refuted this entirely. The IAASB’s standard setting process is the most open and
transparent process in the world, said Ward.

‘When you’ve got such a great degree of transparency, no individual group is
able to dominate.’

Ward added that he was convinced the process undertaken was the right one and
produced the best standards possible. But his remarks are unlikely to convince
those in the investor community opposed to proportionate liability and who
responded to the consultation in large numbers.

Sources within the DTI have suggested that, due to the sheer volume of
responses received on the proposed legislation, the decision on what is included
in the final bill will not be made public before parliament’s summer recess.

However a detailed update on the current state of play with the bill, which
could reveal the government’s current thinking on the liability issue, is to be
presented to the House of Commons next week.

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