We weren’t alone. Who would have predicted that within six months Andersen and now Worldcom would collapse, with the reputation of accountants and auditors tarnished to such an extent that their names are synonymous with corporate wrongdoing?
The situation today means many of our manifesto proposals are more valid than ever. And one leaps out – the need to widen the audit report.
‘Publishing the full auditors’ report is of course out of the question, given that it contains commercially sensitive information,’ we wrote at the time. ‘But more information could be published that would doubtlessly increase transparency and aid shareholders in their decision making – without threatening a company’s commercial standing.’
At the time we were not terribly optimistic that anything would change in the short term, noting that company directors in particular might prove resistant. Today, however, no one can afford to be seen to be resisting a move that could bring greater transparency and integrity to company accounts.
A fuller audit report received crucial backing this week when PricewaterhouseCoopers chief executive Sam DiPiazza added his weight to calls for auditors to take responsibility for vetting a wider range of information – including management’s opinion on the overall health of the business.
The importance of DiPiazza’s intervention cannot be underestimated. If the world’s largest professional services firm is prepared to support change, everyone listens. It also, to be blunt, plays well on the bigger stage. It is vital that accountants and auditors are seen to be proposing change from within Ñ rather than have it thrust upon them – if faith is ever going to be restored in the accountancy business.
There is still a long way to go of course. But in the past the big accountancy firms have had a somewhat deserved reputation as a group that has tended to embrace regulatory change only reluctantly.
Remember Arthur Levitt’s attempts to force the firms to divest themselves of their consultancy arms only a couple of years ago? The firms kicked up a stink but have – by and large – done it anyway.
If this time round they can be seen to be coming up with plausible solutions to real problems (perceived or otherwise) there might be hope yet for the accountancy industry in 2003.
HMRC breaches client confidentiality; and partner profits fall at EY. These stories and more discussed in Friday Afternoon Live
Two new audit partners have been appointed at the firm BDO in its audit practice following continued growth and investment
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
Six new partners have been revealed by top ten firm Mazars