Accountancy & Management: Auditors give rough ride to job proposals

WHATEVER the impression that the higher echelons might give, the membership of the Institute of Chartered Accountants is not altogether convinced by the Auditing Practices Board's paper on the future development of auditing, writes Roger Trapp.

To a certain extent, this is to be expected, since the document is a far-reaching affair, intended to stimulate discussion. Produced by a working party headed by a non-accountant, Citibank's UK managing director John MacFarlane, it raises many of the issues, such as the expectations gap, that many auditors would appear to feel are better left alone.

But while the institute's officials appear to have taken the view that reform is a force they cannot withstand for ever, certain members are not so accommodating. A few weeks ago, at an event hosted by the ICA to debate the APB paper, the suspicion was voiced - perhaps only partly in jest - that the 'backwoodsmen' of sole practitioners and small firms had ganged up to create the perception that the profession was convinced that it had no need to change its ways. For good measure, these typical members lambasted the Big Six for their lack of attention to the subject.

In fact, representatives of the leading firms were there in numbers - and they were also making their voices heard at the institute's monthly council meeting last week. The occasion was a debate over the body's official response to the MacFarlane report, produced by the Financial Reporting and Auditing Group.

Introducing the draft response, Chris Swinson, the group's chairman, appeared confident of an easy passage. He was wrong. While nobody was so rash as to denounce either the response or the report that had prompted it, some of the biggest names from the biggest firms had points of clarification to make and warnings to issue. But there were so many side-issues that the institute was forced to take stock.

The following day, it duly issued a four-point plan as a detailed response to the report. This proposed the setting up of a study group with other interested bodies to consider the control aspects of financial reporting; putting in hand a thorough examination of the effects of competition between audit firms; collaborating with major institutional shareholder organisations, and publication of more detailed guidance for audit committee members to use in assessing the quality of audits and auditors' independence.

Accompanying this was a letter from the president, Ian Plaistowe. 'There is every sign that enhanced corporate accountability will be the watchword of the next few years in the context of a return to growth and that a framework to achieve this will be essential. We are convinced that a successful new framework will require an augmented role for auditors,' he wrote.

(Photograph omitted)