Changes to world audit standards ill advised

And businesses are being laden with higher costs, says the Association of Chartered Certified Acountants.

The Association of Chartered Certified Accountants, in a policy paper Audit under fire: a review of the post-financial crisis inquiries, addresses the issues which have been raised during investigations by the UK House of Lords, the European Commission and the US senate. The EC has promised legislative changes by the end of 2011.

In Singapore and elsewhere, regulators are actively engaged in stakeholder consultations to assess how audit can be enhanced. ACCA is currently also collaborating with the Securities Investors Association Singapore (SIAS) in their first joint research on the value of audit from an investor’s perspective. The value of external audit has been questioned in various quarters during the global financial crisis.

But there has been little research on the views of investors – a vital stakeholder group who actually pay for the statutory audit report, and to whom it is addressed. The research which will be released later this year, will provide evidence-based assessments which will contribute to the debate on the future of audit, particularly at a time of economic uncertainty.

Darryl Wee, country head of ACCA Singapore said: "Audit is under unprecedented scrutiny, following the global financial crisis. We have already had the European Commission promising that 'the status quo is not an option'. In this paper ACCA examines the various proposals put forward in the course of these inquiries and sets out some recommendations for positive reform. Audit plays a vital role in the global economy by instilling trust in company reporting and we believe it needs to be enhanced for the greater benefit of investors and business.”

“But it is essential that the changes made add value and are not motivated by the need to be seen as 'doing something'. Any changes need to meet an appropriate public interest test. Some of the suggestions that have been mooted during the various inquiries, would be, we believe, ineffective and costly."