Magazine article Financial Management (UK)

Audit Ethics Guidance Comes under Fire

Magazine article Financial Management (UK)

Audit Ethics Guidance Comes under Fire

Article excerpt

Pressure is mounting on the Auditing Practices Board (APB) to reconsider its draft ethical guidelines for auditors. Following last month's decision by the ICAEW's council not to recommend that its registered auditors adopt the APB standards, accountancy training organisation Swat lent its firepower to the attack.

"The APB appears to have missed the point of being given responsibility for ethical standards," Swat claimed in a statement. "The problems that led to its new role were with auditing large listed companies and the effect that these failures had on public confidence. The concerns related to public-interest entities, not owner-managed firms."

The APB standards would create problems in auditing many small enterprises, Swat argued. "Requiring an owner-managed business to appoint one firm to prepare its accounts and deal with the tax, and then a second firm to audit the accounts, will simply lead to the duplication of costs and a poorer service for the client," it stated. "As far as the users of the accounts are concerned, there will be very little benefit, if any at all."

The exemptions for smaller businesses would be an even bigger mess, Swat claimed. "They will create a new tier of audits and audit firms that are perceived to be second class."

In its view, the exemption would produce a report that would state: "In common with many independent auditors of small companies, we are not really independent and so the audit cannot really be relied upon."

According to Swat, the government "promised to 'think small first" It seems that the APB has forgotten this promise entirely. …

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