Leader - Markets expect justice
KPMG’s appeal court victory will cause a sigh of relief in many corners of the profession. This week’s decision that the firm’s ‘chinese walls’ are strong enough to allow it act for the Brunei Investment Agency’s investigation into its former client Prince Jefri, without creating a conflict of interest, will reassure many. But they would be wrong to start celebrating too soon.
The appeal court decision will almost certainly be challenged in the House of Lords. Even more significantly for the profession, it is likely to be challenged in the far more important court of public opinion. Lords justices of appeal may understand and accept nice points of professional etiquette, but the market will not. Without accusing any individual of acting unethically, it flies in the face of common sense to suggest that the same firm should be allowed to act for both prosecution and defendent.
In this respect, this week’s warning to the Big Five from the World Bank is timely. Of course, firms are acting quite properly when they sign off accounts according to local accounting rules. But the market sees them as global brands with global standards. Hence the Bank’s call for the Big Five to apply international standards to all their audit sign-offs.
It was the Big Five themselves who sought to establish their global brands.
Now they have to accept the consequence that clients expect straightforward and consistent standards across the world, whatever the professional niceties.