US watchdog urged to resist auditor rotation
The UK accounting profession yesterday urged the US Securities & Exchange Commission to resist demands for compulsory auditor rotation and restrictions on non-audit work.
At a high-level meeting with Harvey Pitt, chairman of the SEC, representatives of the ICAEW instead called on the watchdog to adopt a global framework for auditing and accounting standards following the recent spate of corporate collapses.
The delegation, led by institute president Michael Groom and supported by his deputy Peter Wyman and KPMG’s Neil Lerner, chairman of the institute’s ethics committee, told Pitt the prohibition of consultancy services and compulsory rotation of audit firms would not solve current public confidence problems.
The delegation argued the rotation of auditors could make the situation worse as accumulated audit knowledge would be lost.
The meeting had originally been planned for last October, but was delayed because of the 11 September attacks. Since then, the corporate and auditing landscape has dramatically altered following the collapse of Enron and high-profile accounting scandals.
The rearranged meeting gave Groom and his supporters the opportunity to explain the new accounting regulatory framework introduced in the UK and to urge the SEC to recognise international accounting standards.
Meanwhile, Peter Wyman, who will take over as president of the institute this summer, told Accountancy Age he would be seeking to appear before the parliamentary Treasury select committee when it begins taking oral evidence in March as part of its investigation into financial regulation in the UK.