Big Five - UN report demands audit oversight board
A United Nations report criticising Big Five accountancy firms for their role in auditing failed companies and banks in South-East Asia has recommended the formation of a new international audit oversight committee.
The committee, which would operate through the International Federation of Accountants, is one of the suggestions in a study prepared for the United Nations Conference on Trade and Development.
Author Zubaidur Rahman examined the accounts of 85 Asian companies and concluded that, even though they represented international organisations, Big Five auditors in Korea, Japan and other Asian countries only applied national standards.
Had they adhered to international accounting standards, the auditors might have been able to provide indications of financial difficulties in some of the banks and corporations that subsequently collapsed, the report suggests.
The Big Five are obliged to ensure the quality of national audit services does not fall below that in North America or Europe, it continues. If national standards fall short of guidelines set by the International Accounting Standards Committee and IFAC, local firms should describe the discrepancies in their audit opinions.
?If the companies in question refuse to have such a comparison, then the auditor should withdraw from the audit,? it concludes.
Mary Keegan, technical partner at PricewaterhouseCoopers, confirmed the World Bank has been talking to the Big Five for several months about developing an international IAS framework.
?We as a firm believe IASs are a very useful tool to drive the convergence of accounting standards,? Keegan said.