Leading accountants hit back this week against demands for the compulsory rotation of audit firms made in the wake of the DTI Maxwell report.
Gerry Acher, a senior partner at KPMG, slammed the idea, saying the case for audit firm rotation was not proven.
The attack came as Austin Mitchell MP, regarded by some as the scourge of the audit profession, prepared to table an ‘early day motion’ in the House of Commons, calling for companies to have to change their auditor after seven years.
Many companies in the FTSE 100 have retained the same audit firm for many years. When KPMG last year lost the audit for NatWest after the bank had merged with Royal Bank of Scotland, it brought to an end an audit relationship that had lasted for more than 100 years.
Acher said: ‘I don’t think the benefits of rotating audit firms are proven and certainly would not lead to a more objective audit. There would be a massive amount of disruption, adding nothing.’
The motion, also sponsored by Newcastle MP Jim Cousins, says: ‘We believe that it is now time to ensure proper industry regulation of auditing to make it a system of independent and effective evaluation of companies.’
Martyn Jones, Deloitte & Touche’s national audit technical partner, argued that a change in audit firm would not get to the root of the problem and that it would be better to call for tougher penalties against those who deliberately deceive the auditor.
He said: ‘You can change the deckchairs on the ship, but if the captain is out of control you will still hit the iceberg.’
Roger Housechild, head of the audit and assurance faculty of the ICAEW, said: ‘A change of audit firm could actually suit some companies which would be dealing with a new team that lacked knowledge of the business.’
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