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Elections, reforms and representing London accountants

In his last message for 2019, LSCA President Nathan Steinberg questions whether auditors are solely to blame for corporate collapses, while setting out how ICAEW is representing its members during a time of great change.


December 2019

We are engrossed in an election, the result of which may well have dramatic effects UK plc. Depending on who is in power there will also potentially be major changes to the regulatory environment for audit.

Recent statements from BEIS Committee chair Rachel Reeves and Business Secretary Andrea Leadsom suggest they still appear to put the blame for corporate failure on auditors.

This, in my view, is a sophism.

Companies fail due to bad management or by their trading model becoming outdated. While audit failures may contribute to corporate failure there is an argument that by making an emphasis of matter in respect of going concern or an audit qualification earlier, this may well accelerate corporate failure. It will be very interesting to see what the Brydon report on the quality and effectiveness of audit will add to the debate.

But what is clear is that there must be a reform of board responsibility as a whole so that all board members, not just the professionally qualified members of a board, are subject to sanction over corporate failure.

Until whichever government that is in power makes such changes, I believe any change to audit and its regulation is a half measure in dealing with public interest companies and corporate failure.

The London Society of Chartered Accountants (LSCA) has been leading the discussion in respect of the current debate on the recovery of trust in the profession. Last month we held a full discussion with the main committee of the LSCA, which over 30 leaders of the accountancy profession attended.

Jeremy Mooney, ICAEW’s Director of Communication and Brand, provided a comprehensive briefing of how ICAEW is representing members with government, the press and the wider public. I believe this briefing clearly demonstrated how ICAEW is representing members – there is more information on the activity of the Audit and Assurance Faculty here.

Iain Wright, ICAEW’s Director of Business and Industrial Strategy, and Graham Dale, ICAEW’s Head of Public Affairs and Strategic Relationships, joined us and lead plenary sessions together with ICAEW Deputy President David Mathews, Vice President-elect Julia Penny and Malcom Bacchus, Chairman of Ethical Standards.

These sessions discussed the following questions:

  • What can ICAEW do better in presenting to the outside world?
  • What can ICAEW do better in presenting the message to members?
  • What can ICAEW do better for member directors on public interest companies?

The discussions were robust, and the results will assist ICAEW as the debate continues and intensifies.

Hopefully, this model can be used round the country, so all members can benefit.

As this is my last article for 2019, I wish all members a good and happy New Year and hopefully a bit more common sense from our pollical leaders in the new year following the election.

Nathan Steinberg is President of the London Society of Chartered Accountants and a consultant with Kreston Reeves

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