Ian Plaistowe, chairman of the APB, was speaking on his return from the US where he made submissions to the Panel on Audit Effectiveness on developing audit standards.
‘The aim of our oral and written submissions to the Panel on Audit Effectiveness are to emphasise the importance of an international approach to developing auditing standards. We encouraged the US to participate fully with the work of the International Auditing Practices Committee rather than adopting a purely national approach,’he said.
The Securities and Exchange Commission, which commissioned the panel to consult on auditing practices, is understood to be pushing the panel to complete its work. The deadline for submissions is 21 July 2000.
The main bone of contention for the APB is a proposed mandatory forensic phase of the audit. According to prior APB research, such a phase is costly and unlikely to detect fraud, especially at management levels.
‘In response to the Panel’s specific proposals for a required mandatory forensic phase of the audit to detect fraud, we described our own research into management fraud and outlined the difficulties of dealing with the ‘expectations gap’ regarding the auditor’s ability to detect sophisticated management fraud in a cost effective manner,’ Plaistowe told the panel.
Given the short period of consultation the APB said its response would have more impact if it were physically handed over. APB technical adviser Jon Grant, who accompanied the chairman to the US, said: ‘We wanted to redress the balance. It was a good job since there were many state boards there vying for rules that suit their needs. We need international standards.’
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