PracticeConsultingFears over auditor conflicts of interest

Fears over auditor conflicts of interest

One in five finance directors fear their auditors may suffer conflicts of interest in the work they do for them.

The concerns, aired in this week’s Accountancy Age/Reed Accountancy Personnel Big Question Survey, follow the English ICA’s decision to investigate Grant Thornton’s successive roles as tax adviser, investigator and receiver of Heritage plc. The firm was appointed after its investigation caused the company’s bank to refuse a financial rescue plan.

The issue was first raised by the House of Lords ruling that KPMG needed to improve the security of internal Chinese walls after a complaint by Prince Jefri of Brunei.

Edinburgh university FD George Sutherland said: ‘The whole process is flawed. The requirement for audit is externally imposed, but the auditors are appointed by the company. Auditors have to balance commercial considerations against how they perform their role.’

Some FDs who expressed confidence in their auditors still said companies needed to guard against conflicts. ‘There is not a conflict when they are acting as auditors – it arises when they act as consultants or accountants,’ said Ron Haley, FD of Andrews Kent & Stone.

Two-thirds said they were confident their auditors had no conflicts of interest.

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