When he testifies at the SEC hearings in New York later today, Ward will argue that forcing UK audit firms with client companies listed in the US to comply with detailed rules would be ‘counter-productive’.
Ward believes the UK ‘framework approach’, which sets out fundamental ethical principles backed by professional education and enforcement, is in practice more rigorous than the US rule-based approach. He will also tell the hearing there is no evidence that the provision of non-audit services has resulted in a decline in the quality of the audit.
Today’s meeting is the second public hearing called to debate the SEC’s proposals on auditor independence. Chaired by Arthur Levitt, the SEC is seeking to update the requirements governing auditors’ investments in clients and the scope of services provided to audit clients.
The English ICA has stated, however, that auditors should not be put in the position of having to audit a significant component of the financial statements to which they were linked. But Ward deems that by trying to prohibit some advisory services while allowing others, the SEC proposals contain arbitrary distinctions that will not stand the test of time.
KPMG chief Stephen Butler yesterday chose to cancel his planned appearance at the hearing. Butler claimed his request to change his contribution to the morning because of another afternoon engagement had been rejected. But the SEC argued it had done its best to accommodate the many witnesses’ diverse scheduling needs.
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