Accountants Pay Price of Watchdog Crackdown
BRITISH accountants have paid nearly [pound]5m in disciplinary fines and costs in the past seven years, according to figures from industry watchdog, the Joint Disciplinary Scheme.
Coopers & Lybrand, now part of PricewaterhouseCoopers, tops a list of high-paying big- name offenders. It was ordered to hand over [pound]3.3m in February 1999 after the committee exposed "shortcomings in both vigilance and diligence and a failure to achieve an appropriate degree of objectivity and scepticism" in its work for newspaper tycoon Robert Maxwell's business empire.
Stoy Hayward paid out [pound]750,000 after the the JDS ruled in August 1998 that it had let explosives firm Astra Holdings overstate its profits for four years. A partner and former partner at Stoy Hayward were reprimanded and fined [pound]1,500.
Accountants linked to the Barlow Clowes and Polly Peck scandals have also been censured by the JDS discipliniary scheme.
Five accountancy firms and 15 individuals have been fined, censured or ordered to pay costs since the disciplinary regime was installed in 1993.
A number of high-profile investigations currently being conducted by the JDS could push the fines total even higher. It is examining PwC in connection with the collapse of BCCI, Stoy Hayward in respect of its work with Polly Peck and PwC's audit of Geoffrey Robinson's engineering firm, Transtec.
Professional standards have become a highly sensitive topic for accountancy firms. US financial regulator, the Securities & Exchange Commission, has spearheaded an international effort to reform auditing practices. An SEC report published last January concluded there had been more than 8,000 infringements of share ownership rules by PwC staff.
Accountants have faced allegations of conflict of interest where they have provided auditing and consultancy services to a single firm. Business development over the past 20 years has seen many accountants build lucrative consultancy arms. The firms claim "Chinese walls" ensure the different parts of their businesses are kept separate.
The SEC's campaign to address the issue of auditor independence has inspired changes in Europe. …