BDO Stoy Hayward is crowing. One of the most intimidating US regulators, the Public Company Accounting Oversight Board (PCAOB) – set up with the sole purpose of harrying the auditors of listed companies on their quality and reliability – has given Stoys a clean bill of health.
Phew! You might say, that must be a relief to the firm. And given that the
PCAOB reviewed audit engagement and audit quality control without finding
anything to complain about, the firm would be forgiven a little boasting.
Indeed, it bodes well that a UK firm, the first examined by the PCAOB, could
achieve such a glowing report.
But this has other implications, namely for the UK Audit Inspection Unit’s
consultation on whether it should name names when it reports on the quality of
auditors here.
As is clear from the PCAOB findings, US watchdogs are unafraid of going
public on who is and who isn’t meeting the right standards on audit.
Here in the UK Stoys and Grant Thornton have demanded that the AIU do the
same, or risk giving the impression that audit quality outside the Big Four is
not quite up to standard. The firms are keen to be named, and therefore let the
public, investors and other auditors know who’s up to scratch and who’s playing
catch up.
The point is that now the PCAOB has declared Stoys as free of problems on
audit quality, it will become difficult for the AIU to say that this arrangement
would not work in Britain. If some firms now come forward and say, ‘We can’t go
public’, we can fully expect some observers to ask the obvious question: why
not? What have they got to hide? The issue is then one of public perception, and
this, as we all know, can mean everything when it comes to regulation.