Don't just criticise firms ICAS tells FRC
ICAS says publishing negative audit inspections will damage confidence in audits
The Institute of Chartered Accountants of Scotland has warned the FRC that
publishing negative audit inspection reports could harm confidence in individual
audit firms and the wider profession.
The call from ICAS forms part of its response to the consultation on the work
of the FRC’s Audit Inspection Unit. The unit does not publish individual reports
on firms, but has come under pressure to be more transparent.
ICAS, however, argues that by only outing firms which fail to cooperate and
address issues of audit quality, the FRC fails to take into account importance
of reputation to a professional firm. It will also create a danger that a
one-off problem could be seen as a fundamental flaw.
‘The key to audit monitoring and, where necessary, improving audit practices,
rests upon effective cooperation between the profession and the monitoring
body,’ said ICAS President, Norman Murray. ‘However, we believe that effective
cooperation is unlikely to be enhanced by the threat of potential publication of
negative AIU reports on individual firms.’