The industry is “more or less in crisis” but maintains a “heavy air of denial”, argued Robert Barrington, executive director of Transparency International UK, in a lively debate on the current state of the auditing held in London’s Mansion House last night.
The “elephant in the room is the huge conflict of interest” in audit regulation, as the profession doesn’t have the will or the capacity to self-regulate, he told those attending ICAEW’s latest Audit Quality Forum event.
The Financial Reporting Council recently agreed to publish a register of interests following a backlash to the recent HBOS/KPMG investigation.
Tony Cates, partner and non-executive board member at KPMG in the UK, said he did “agree with a lot,” of what Barrington said but said he objected “to the accusation that we’re unethical as a profession”.
Cates argued that one issue is an expectation gap between what the public think auditors role is, what auditors should do and what they are allowed to do.
He said that the profession “has to be bold” or it will be in crisis. “We’re not there yet.”
Cates said auditors also rely on a level of openness from clients. “If you don’t think you’re getting it [then] you step down and make a show of it,” he added.
He argued that audit firms, like its big clients, are susceptible to reputational risk so it would be counterintuitive to give unethical advice.
Lord Mayor of the City of London, Charles Bowman, spoke of the positive effects business has on society but admitted it must work harder to earn public trust.