The news that a senior UK partner at PricewaterhouseCoopers has been forced to resign from his job following a clash with the US Securities and Exchange Commission over independence, has raised the question of who is really running the UK profession.
Geoff Westmore, PwC’s global head of transaction services handed in his notice when it was discovered that his brother-in-law was financial controller of SEC-registrant company and audit client Reuters.
In the US, it is not uncommon for a partner to leave the practice if it is perceived that it could compromise an audit, but it is unheard of in the UK. As more smaller firms work for international clients, the SEC could loom increasingly in its war to ensure audit independence.
One former member of the Scots ICA council said 20 years ago accountants could expect their institute to defend them in public. ‘You would expect the president of the institute to be leading the debate but they are not even at the table now. It will be resolved in a completely different way,’ he said.
Infighting over education and training and the gradual removal of the institutes’ regulatory powers has left them disorganised and powerless in the face of an American giant, he added.
Arthur Andersen partner and chairman of the Auditing Practices Board Ian Plaistowe, said: ‘Companies are beating a path to New York to get their shares listed there and the auditor has to comply with US rules. The SEC sees no reason why it should listen to an accountancy institute overseas. It is irrelevant.’
Mary-Louise Wedderburn, ACCA audit committee secretary, said: ‘We would resist the SEC over adopting a strictly ruled approach. We remain in favour of the broader framework approach and do not feel the need for exhaustive, impractical and unrealistic rules.’
For the Big Five, the process began years ago. They have had to submit to the power of the SEC because of their global client base. Deloitte & Touche in London said it was in constant dialogue with its US firm in order to ensure compliance.
It is a measure of the SEC’s dominance that many senior figures in the UK profession, who spoke to Accountancy Age about the issue this week, asked to remain anonymous.
Commentators have noticed that the SEC, regulator of the world’s largest capital market, has become ever more intransigent, even to the point of disagreeing with European accounting law.
One Brussels-based source, calling for a single European response, said: ‘The SEC is trying to impose its rules on the world and there is no counterbalance against them. It will abuse its powers.’