Great news for PwC, great news for the profession. Sadly, anecdotal evidence shows that some students read that David Duncan earned $1m and they liked the sound of that. Oh dear.
The root of recent US events was greed. So how do we create an environment where integrity prevails? As always sticks and carrots influence behaviour.
Let’s start with corporate management. The stick is to have effective penalties for rule breaking. Our American cousins are on to this one – jail sentences should have a sobering effect. The UK company law review has also upped the ante with greater penalties on the cards.
Carrots are more difficult. There is already a premium for transparency but it needs to be enhanced, with short-term earnings pressures reduced.
Next we come to the ‘guide dogs’, non-executive directors. Recent events have deterred people from taking on non-exec roles. Remuneration needs increasing commensurate with increased responsibilities.
Finally, the ‘watchdogs’, auditors. The liability threat was already there but the collapse of Andersen has provided the ultimate frightener.
The carrot is the expansion of audit scope and fees. More important is public confidence. If accountancy is to restore its position it must show the highest standards.
Competition has been fierce – increasing efficiency and improving value for money. But competition brings pressures that can erode quality and integrity. Professionalism means refusing to compromise.
If one auditor resigns because they are unhappy with something, you would not expect another firm to pick up the work unless the matter is resolved.
We must re-assert our values. We must not follow the example of others in pursuing short-term gain at the expense of the long-term health of our profession.
- Rodger Hughes, managing partner of markets at PwC.
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