Vice-president of the ICAEW, Paul Druckman, said the recent financial scandals, including the recent alleged financial impropriety against Dutch supermarket giant Ahold, have shaken investor confidence and ‘brought ethics to the top of the political agenda.’
In a speech to the College of Europe in Brugges yesterday, he said: ‘It was the complete failure, by both executive and non-executive directors at Enron to ensure that the company operated with a proper sense of right and wrong that was the most shocking to investors and the public alike,’
Such scandals have put the reputations of accountants at risk.
Druckman said that in the past, high standards of financial reporting, auditing and ethics underpinned the trust that investors had in the honesty of the information accountants gave them and this gave the profession freedom to develop.
‘That trust and confidence,’ he said, ‘underpins the liquidity and integrity of the world’s capital markets and enables investors and companies to raise capital at fine rates. As preparers or auditors of financial information, the profession is held publicly accountable for its veracity and provenance.’
According to Druckman, to restore public confidence, the profession must demonstrate it is committed to high quality audit and strong ethical fibre. The key to this, he said, was transparency – providing clear explanations of what an audit actually does.
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