20 December 2002
Responding to a Department of Trade and Industry consultation document, CIPFA's policy and technical team said DTI officials should guard against over-emphasising the auditing side of regulation.
The tone of the DTI's consultation document, released in the wake of US accounting scandals, indicates that the auditing profession could be subject to heavier regulation when the department announces its findings early next year.
The 'big four' remaining auditing firms, reduced by one in the wake of Andersen's role in the Enron fiasco, audit the vast majority of FTSE 100 companies – and around 90% of UK listed companies' capital – and critics of the current regulatory regime believe they are too influential.
But Vernon Soare, policy and technical director at CIPFA, said: 'The government must avoid putting all its eggs in one basket by focusing heavily on auditing.
'Who is to say that there won't be problems in other areas of the profession a few years down the line? We need a system that allows for risk assessment across the profession, but the ability to focus on problems as they arise.'
CIPFA recommends the continuation of non-statutory regulation, a closer relationship between the two main accounting boards – the Accountancy Foundation and the Financial Review Council – so that the profession can better co-ordinate regulation, and making the 'public interest' element of regulation more transparent.
PFdec2002
