ICAS PRESIDENT Iain McLaren sits elbow-to-elbow at the 2011 ICAS conference with Angela Knight, head of the British Bankers’ Association, and ex-standard setter Sir David Tweedie. All of them agree the profession must address the perception that auditors lack independence and be proactive to rebuild public trust.
“You can’t steer the ship when you are in the middle of a storm; you must set your stall out before the crisis hits and if you’re concerned, do something now,” said Knight, warning that post-crisis fire-fighting is not enough.
Restoring trust in banking and audit is “a major challenge”. Knight said for the BBA, “it’s about getting out there”. “We’ve got to do our knitting and do our knitting well,” she added. “You have to do the right thing for hell of a long time to build trust, but you lose it fast. There is no magic solution. “
Tweedie acknowledged “there is no question that auditors came out of the financial crisis badly”. He said fear of being easily dismissed by a client can have the effect – real or perceived – of diminishing auditor independence, concluding: “We need to do more to defend audit” so observers can be confident the auditor report is not moderated by fear of dismissal.
A debate on auditor scepticism sparked much consensus but few concrete answers. The trio agreed “lots of it is down to personality”, saying it is important to hire the right people in the first place.
Iain McLaren said on the company side, having non-accountants on boards can “help members ask the right questions”. “It is vital that board members are willing to be the odd one out,” he concluded, while David Tweedie said boards must be populated by “tough people”.
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