PracticeAuditUncle Sam is a bad role model

Uncle Sam is a bad role model

It might, of course, all just be a case of sour grapes - but even so the ICAEW and ACCA are not happy about the new ethical rules governing auditors.

I mention the grapes because the Audit Practicing Board is now in charge of managing ethics, instead of the institutes, and the accountancy bodies might still be a little miffed at the change.

Take this rather terse comment on the ethics standard written into a press release last week by the ICAEW.

‘We have implemented these requirements because we are obliged to.’ Clearly, there’s no sense of joy involved.

Talks, negotiations, discussions and outright dissent have now gone on ad nauseum. The institutes keep saying the ethics are all wrong but the APB, keen to see itself as taking a firm hand, refuses, for the most part, to back down. The ICAEW believes there’s still some refining to do, while the ACCA believes the rules are a disaster and in need of a total revamp.

In many ways this is an embarrassing situation to be in so long after Enron and WorldCom set in train the changes that put the APB in charge of ethics.

Oddly though, everyone should be vexed about one particular sticking point. On the issue of the fee dependency rules the ACCA and ICAEW accuse the APB of abandoning the UK ‘principles’ approach to standards in favour of a much more ‘rules’ based solution a la Uncle Sam.

The detail is that the APB insists no firm should be reliant on a single client for more than 15% of its income. Accept 15.1% and you break the rules and you should be resigning the work.

Least it be forgotten, let me gratuitously remind everyone that it was in the US that a rules based approach gave us the two biggest financial scandals in corporate history.

Such a history hardly constitutes a recommendation for rules and, therefore, its not surprising that the professional bodies are still hopping mad about the whole thing.

So, sour grapes? I don’t think so, there’s a substantive point here that’s worth sorting out. But, let’s do it quickly, good old British prevarication can’t be seen to be running this particular show.

Related Articles

KPMG South Africa to review past audit work amid fresh scandal

Audit KPMG South Africa to review past audit work amid fresh scandal

1w Alia Shoaib, Reporter
FRC introduces £10m sanctions for Big Four firms

Audit FRC introduces £10m sanctions for Big Four firms

2w Alia Shoaib, Reporter
Ukraine’s PrivatBank files $3bn claim against PwC

Audit Ukraine’s PrivatBank files $3bn claim against PwC

3w Alia Shoaib, Reporter
Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

Audit Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

3w Alia Shoaib, Reporter
Big Four dominate FTSE 250 audit market in Q1 rankings

Audit Big Four dominate FTSE 250 audit market in Q1 rankings

2m Alia Shoaib, Reporter
Deloitte to pay $149.5m over Taylor, Bean & Whitaker audit failure

Audit Deloitte to pay $149.5m over Taylor, Bean & Whitaker audit failure

2m Alia Shoaib, Reporter
Carillion inquiry: missed red flags, aggressive accounting and the pension deficit

Audit Carillion inquiry: missed red flags, aggressive accounting and the pension deficit

2m Alia Shoaib, Reporter
Deloitte’s audits of Hezbollah-linked bank to be examined by Dubai court

Audit Deloitte’s audits of Hezbollah-linked bank to be examined by Dubai court

2m Alia Shoaib, Reporter