In a spin over audit rotation.
Accountancy may have wholeheartedly rejected the idea of mandatory audit rotation, but there seems to be little consensus between the large firms over how confidence should be restored.
A survey earlier this month by Accountancy Age found that of the top thirty firms involved in audit, only one – Baker Tilly – agreed with the proposal of enforced rotation of auditors. All other firms questioned disagreed or refused to comment on the issue.
But while auditor rotation is not an option for them, there is no co-ordinated alternative. Some think the industry is fine as it is while others have widely differing opinions on what needs to be done.
Rodger Hughes, managing partner for clients and markets at PricewaterhouseCoopers, said: ‘In the UK, there is no substantive reason why confidence should have been damaged. We have not had the disasters the US has had. The best way to retain confidence is to maintain audit quality and integrity by adherence to our existing, strong professional standards.’
But Neil Lerner, head of regulatory issues at KPMG, did see the need for some change. ‘The (Co-ordinating Group on Audit and Accountancy) suggested audit committees review audit appointments every five years and make an explicit statement to shareholders where they continue with the same audit firm,’ he said. ‘We would rather see developments move along these lines with audit appointments under regular review. (We also think) that lead partners should rotate every five years, and other key partners every seven.’
The mid-tier firms had some slightly more radical suggestions, but yet again no pattern appeared.
Jeremy Newman, managing partner at BDO Stoy Hayward, said: ‘A specialist audit qualification would help increase the quality of those undertaking audits. There is also a strong case for a review of the regulatory framework that governs the profession. Self-regulation is not the most robust position for the profession to be in.
Peter Rowley, audit partner at Grant Thornton, suggested: ‘Top of our list of possible changes is an improvement in the audit quality assurance process. This would involve greater independence of the bodies responsible for setting strategy in relation to ethical and competence standards for accountants.’