But while it might look a little embarrassing that the legislators are
forcing the issue, while regulators continue to navel gaze, it could work in the
watchdog’s favour. The consultation, in case you’d forgotten, was on whether the
reports written on individual audit firms should be published for all the world
Mid-tier firms have argued that they should, believing that they will reveal,
not only that their audit work is comparable to the Big Four’s, but also link
the largest firms to some of the problems mentioned in the current anonymised
reports. Indeed, they believe that anonymised reports ‘perpetuate’ the ‘myth’
that Big Four audit is more reliable than from other firms.
But now, Baroness Noakes, a former president of the ICAEW, is pushing for the
Freedom of Information Act to apply to the inspection reports, a measure that
would leave the full panoply of reporting out in the open.
Clearly, deciding on whether to make the reports public would be a difficult
decision for the regulators mulling the matter over. Big Four partners would
probably lobby hard for the status quo, arguing that anonymous reporting
encourages open and honest communication between the regulator and the firms it
overseas. But an FOI application would make the anonymised reports pointless and
open the way for the regulator to publish the reports without fear of criticism.
The regulator will still have to decide if the reports should be given out under
the act, but it might just absolve them of blame if they do it.