The UK audit standard-setter will issue its work programme as a consultation paper at the beginning of September. Executive director Jon Grant told Accountancy Age this week that the board will recommend it tackles aggressive earnings management in the wake of the accounting scandals including those that have brought Enron and WorldCom to their knees.
Headed by former Andersen partner Ian Plaistowe, the APB pinpointed the topic as urgent over a year ago. Now it wants to address the three areas where it thinks that earnings can be ?’anaged’ by companies.
As well as bolstering the work already being done by the International Auditing and Assurance Standards Board on tackling fraud, the APB is leading the global drive to address issues surrounding materiality and accounting estimate, Grant said.
With the European Commission expected to require international auditing standards to be harmonised in time for the introduction of international accounting standards in Europe in 2005, the APB will also address the global picture in next month’s paper.
The IAASB is expected to finalise details of its own forthcoming work programme by the end of the year. Grant said: ‘We think there are things to be done but our dilemma is whether to hold on and wait for an international auditing standard or plough on.’
Martyn Jones, technical partner at Deloitte & Touche, acknowledged that more companies were being tempted to massage results to meet market expectations.
‘Directors are put under an increasingly intolerable level of pressure to deliver better results,’ he said.
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