Institutional investors have turned the focus of their attack on the audit industry to the introduction of international standards on auditing, following their apparent failure to block a liability cap.
Link: IAS special report
In another stand aimed at overhauling the current audit status quo, representatives of the investor community have hit out at the new standards, created by the International Federation of Accountants and due to be adopted in the UK from 15 December.
Iain Richards, head of governance at Morley Fund Management, said he was worried that the standards ‘created by a trade association of the accounting profession, rather than an independent body’ would enshrine practices that do not guarantee quality.
Other key investors expressed similar concerns. ‘We are concerned that these standards should not be of the rule-based variety which give rise to boiler-plate responses,’ said ABI director-general Mary Francis.
‘It is therefore crucial that we do our best to ensure that the ISAs are sensibly written.’
The Auditing Practices Board has 28 proposed ISAs, with additional material incorporated from its own statements of auditing standards, out for exposure. APB executive director Jon Grant said the existing ISAs were not dissimilar to current UK standards but were undergoing a revision programme to make improvements.
‘Investors can’t have their cake and eat it,’ said Grant. ‘They can’t ask for principles-based standards and for enough rules to guarantee improvements in procedure.’