Questions asked of ICAEW recommendations

Specifically, the institute has recommended audit partners should be subject to a two-year cooling off period before they join an audit client as an employee or director. Also proposed is the tightening of rules governing the rotation of audit partners and the framework surrounding the provision of non-audit services to an audit client.

Peter Wyman, who became president of the ICAEW last week, said: 'I know these proposals are not universally welcomed. But I believe the advantage of being able to say we fully comply with international and European best practice outweighs the inconvenience these changes will cause.'

Industry observers are questioning whether these changes are of real benefit to the audit process or simply cosmetic tweaking. Certain partners at the Big Four firms have admitted these changes will benefit public perception but will not improve the quality of audit.

Admittedly, that is just half the battle. Most accountants recognise the Enron collapse has raised two issues; that of public perception and that of the real issues about audit quality and independence.

The ICAEW reforms will go part way to restoring confidence. Now comes the deliberation about what changes can be implemented to improve financial reporting and that of independence.

Arguably much of what needs to be done to improve financial reporting and corporate governance lies in the hands of government and regulators. Many of the improvements already exist in recommendation-form by the company law steering group.

Frustration is tangible in the ranks of accountants who are keen to see the government reform an already antiquated law.

Wyman said: 'A lot of what needs to happen next is in corporate governance. It's not something the profession can do. I hope it [the company law review update] is included in the Queenås speech and enshrined in legislation.'

Clearly defining the role and responsibilities of directors, reform to audit liability, structuring a statutory operating and finance review and improvements to audit committees are some of the changes accountants want to see.

Steve Maslin, partner at Grant Thornton, agreed: 'The profession can't act alone to mandate improvements to audit committees, directors' responsibilities and corporate governance issues.'

See also:

ICAEW, ICAS lag behind institute rivals

Exclusive research reveals the two traditional accountancy institutes in the UK are lagging behind their newer rivals in significant areas.  11 Jul 2002

End of an era for the institutes?

Traditionally, budding accountants in the UK have looked to the ICAEW or perhaps, if you were Scottish, to the UK's other long-established accountancy institute, ICAS. But times are a-changing.  10 Jul 2002

ICAEW reveals the firm of the future

The successful accountancy firm of tomorrow will mirror the large firms, taking on a corporate structure and relying on value added services for greater profitability, according to new research.  26 Jun 2002

FSA begins task of rebuilding the profession

Just days after Andersen received a guilty verdict in Houston, Accountancy Age learned the Financial Services Authority, under Sir Howard Davies, is in talks to take over financing of the profession's watchdog - the Accountancy Foundation.  20 Jun 2002

ICAEW to debate new review system

A new review system for smaller firms will be debated again by the ICAEW's council, but not until September at the earliest.  12 Jun 2002

Mid-tier firm calls for auditor restrictions

A mid-tier accountancy firm has thrown down the gauntlet to the UK accounting profession, demanding massive restrictions on auditors that sell other services to their clients.  07 Jun 2002

Like this story? Spread the news by clicking below:

 del.icio.us     Digg this     reddit!