News emerged last week that US authorities have vetoed the idea for the
auditors of US registered companies even foreign registrants.
This will mean few companies in the UK are likely to sign deals with their
auditors, despite legislation permitting such deals here in the UK.
This is bad news. The US stance is probably political or to put it another
way the regulators and lawmakers across the pond have shied away from being what
might be viewed as being soft on auditors when the country is caught in the
midst of an economic firestorm. After all, if you invest in a company and it
abruptly goes the way of all thing you’ve got to have someone to sue. Right?
And that has been the point of auditors all along. Regulators, politicians,
investors, even journalists, have an unspoken expectation that the big auditors
will underwrite the world’s financial markets.
Is that fair? Even if you take the harshest view of auditors that kind of
position cannot be justified. What about the executives what about the investors
that exert such pressure for short-term gains? Surely they carry just as much
responsibility? But the auditors have deeper pockets.
The irony is that liability caps were introduced to reduce the risk to
auditors and thus encourage more to move into the Big Four market. It was
protective but for good reason. We need more auditors so that if one falls
over we don’t create a conflicts of interest crisis on a global scale. No one
said auditors shouldn’t be liable, just not for everything.
Auditors will now campaign for a law making caps mandatory, setting up a
conflict with investors who don’t like the idea. The debate is about to enter
its next chapter with little sign of a resolution. That’s not good for global
Simon Wright of CareersinAudit.com discusses how an effective cyber defence force is critical to businesses worldwide and how internal auditors can make the transition to a new career in cyber security
The FRC has said that the investigation will 'consider, but not be restricted to, issues regarding misstated accounting balances'
Craig Maxwell joins the audit and assurance team in Scotland
Stephen Grayson to join the audit department in Manchester