Cutting auditors' noses off to spite clients' faces

Article Abstract:

The independence of auditors should not be the subject of further regulation. The experience of Italy, where rotation of auditors has been made mandatory for publicly listed companies, proves that audit failures will not necessarily be averted if regulatory sanctions to safeguard audit independence are imposed. Instead of proceeding on the evidently false assumption that increased regulation can solve the problem of audit failure, it should be recognized that real sanctions are already present to safeguard the interests of shareholders. These sanctions stem directly from the fundamental principles enshrined in the professional ethic of the audit profession and are sufficient to deter firms from being less than objective in the conduct of audits. These sanctions, though informal, are much more effective than any formal regulation since they punish incompetence with the destruction of a firm's reputation.

Auditing

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An action plan

Article Abstract:

Spanish businessman and politician Abel Matutes is profiled. Matutes is the first European Commissioner to be given responsibility for small business. Matutes discusses current European Community (EC) policy on small business and current steps being taken by the EC to promote small business. Among the projects undertaken to aid small businesses within the European Community are proposals to simplify small business taxation, financing for small businesses, and information services between small businesses and regional EC offices.

International aspects, Small business, Beliefs, opinions and attitudes, Matutes, Abel

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Regulation of auditors: implementation of the EC eighth company law directive

Article Abstract:

A response is presented by the Institute of Chartered Accountants to a Department of Trade and Industry consultative document on the regulation of auditors. Topics discussed include: the role and training of auditors, auditor independence, and the regulation of auditors. The Institute disagrees with the Department's proposals to ensure auditor independence by rotating auditors and by prohibiting auditors from offering non-audit services to clients.

Institute of Chartered Accountants in England and Wales

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