A staunch opponent of the US drive for an international rule-based approach to audit independence, Graham Ward, said: ‘I hope the SEC will give serious consideration to a mutual recognition agreement which would recognise the strength of the UK’s framework approach.’
Ward’s comments come in the wake of a protracted debate on the modernisation of auditor independence rules in the United States. The revised rules announced on 15 November substantially limit the amount of consulting work Big Five firms can offer audit clients. But the SEC ruled out prohibiting firms from offering non-audit services to audit clients following persistent opposition from accountancy firms.
The UK accountancy industry applies a principles approach to securing and monitoring auditor independence. An ICAEW inquiry published in August found concerns raised about audit independence in the US following investigations by the SEC were not repeated by UK firms.
‘Overall we welcome the SEC’s proposals. We are pleased to see that the SEC has begun to recognise the often unforeseen results of implementing a US regulatory regime in the global marketplace. However more needs to be done,’ said Ward.
The International Federation of Accountants and the European Federation of Accountants have both recently adopted a principles-based code of conduct to independence. IFAC hopes Iosco, the world club of stock market regulators, will endorse its code on auditor independence next April.
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