Lax auditing undermining IASC goals
Poor compliance and lax auditing practices are undermining the goals achieved by the global standard-setting body, according to a new survey out this week.
David Cairns, former secretary-general at the International Accounting Standards Committee, this week criticised companies for not fully complying with global standards but using the IAS label. He also slammed auditors for not being sufficiently diligent to avoid creating watered-down or ‘IAS lite’ standards.
Cairns said: ‘Companies should comply fully with IASs before attaching the IAS label to their financial statements. Both they and their auditors should redouble their efforts to eliminate “IAS lite”. Otherwise the IASC will lose its hard won support and recognition.’
He urged auditors of companies that apply IASs to take their responsibilities more seriously for reporting on compliance with IASs.
‘The increased use of IASs carried obligations – it is not simply an opportunity for more glossy brouchures and high-profile seminars. Auditors should: report on IAS compliance whenever companies use IASs; be more rigorous in their audit of IAS compliance; and always qualify their audit opinions for non-compliance with IAS requirements,’ warned Cairns.
Of the 165 companies involved in the survey, 17 disclose exceptions from full IAS complaince, 25 use IASs only when permitted by, or in the absence of, national standards. And at least 20 companies, including some of Europe’s largest companies, claim full IAS compliance but adopt accounting policies that conflict with IASs.
Further findings in the International Accounting Standards Survey 2000 reveal that only 20% of FTSE Eurotop companies apply IASs.
Links
EC pushes for IAS requirement by 2005
Tweedie recognises standards burden