Audit reforms on table at Pan Accountancy Lunch

LSCA President Nathan Steinberg shines a spotlight on the speech made at the Pan Accountancy Lunch by Liz Murrall, chair of the FRC’s Corporate Reporting Council and Director of Stewardship and Reporting at The Investment Association.

November 2019

At the time of writing, I am on a train from Cardiff after attending the South Wales District society dinner, on my way to Chelmsford Racecourse for the South Essex Charity Ball, another stage on my road trip.

Last Friday I was in Newcastle for the Northern Dinner and two weeks earlier I visited Edinburgh as well as Manchester for their respective dinners. Amazingly, I have not put on weight.

More seriously, in between these events, the LSCA hosted the Pan Accountancy Lunch with the Lord Mayor, the ICAEW President, Deputy President and Vice President in attendance.

The keynote speaker was Liz Murrall, Director of Stewardship and Reporting at The Investment Association and recently appointed chair of the Corporate Reporting Council, part of the Financial Reporting Council.

Liz shared her views of the current audit debate, and in my view the most important points she made were:

• While many auditors do good work and failures are far and few between, the failures that do occur tend to be high profile and can impact many stakeholders not just shareholders;
• There is no evidence that joint audits increase overall quality and choice;
• Investors are concerned about conflicts when the auditor provided non-audit services;
• Support for limit of large companies audited by the big four audit firms;
• The scope of the audit should be revised, and;We consider it essential that all directors can be held to account.

I share a lot of these views, especially as my mission statement is the recovery of trust in the accountancy profession.

As I have said previously, I have challenged Rachel Reeves MP, chair of the BEIS select committee, to not just introduce more regulation to our members but also increase comprehensive regulation of boards and management.

After all, auditors do not make companies fail. It is a management failure and this fundamental point needs to be recognised continuously within government, the press and the general public.

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

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