The warning was issued by Ian Plaistowe, longstanding chairman of the UK’s Auditing Practices Board, who on Tuesday put out for consultation the body’s new work programme.
The board has put taking a fresh look at its guidance on fraud detection at the top of its to-do list. The move is driven primarily by the plethora of accounting scandals that have hit the United States over the past nine months.
Plaistowe said: ‘You will not eradicate aggressive earnings management 100%. Auditors can never guarantee accounts because they are not audited to the penny.’
He reiterated that the problem of the ‘expectation gap’ was not just one for the APB but also one for governments and regulators.
‘Auditors have enormous difficulty in talking about their successes.
There’s no way we can sing the praises of auditors’ success. We are left with a conundrum,’ he said. The board also plans to tackle special purpose vehicles.’
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