KPMG's UK senior partner has, according to Accountancy Age:
called for 'kitemark' standard for audit reports, arguing that, with hindsight, accounts can turn out to be 'spectacularly wrong'.
John Griffith-Jones has apparently called for a 'new approach and new contract' with society. He is reported as saying:
I am making the case for the acknowledgement of reality. I believe the 'kitemark' that the profession and society should agree to work towards could be summarised in the vernacular as 'these accounts are about right unless the management have deliberately conspired to falsify them.
He has a problem though. Candidly, many of us think this is pointing the finger in the wrong direction. We think (and society thinks) that the Big 4 in particular play a role in mis-stating those accounts, especially when it comes to things like tax in which they deliberately sell services that manipulate the outcomes of transactions in a way that abuse society at large.
I think John Griffith-Jones is right to call for a new contract with society. I'd urge him to sign his firm up, globally, to a Code of Conduct of the sort the Tax Justice Network has proposed. Then we'd be making progress. This requires firms like his own (and all its numerous tax haven parts) to agree that:
- Taxable transactions are recorded where their economic benefit can be best determined to arise;
- Tax planning seeks to comply with the spirit as well as the letter of the law;
- Tax planning seeks to reflect the economic substance of the transactions undertaken;
- No steps are put into a transaction solely or mainly to secure a tax advantage;
- Tax planning will be consistently disclosed to all tax authorities affected by it;
- Data on a transaction will be consistently reported to all tax authorities affected by it;
- Taxation reporting will reflect the whole economic substance and not just the form of transactions.
If KPMG can do that then we'll believe 'these accounts are about right unless the management have deliberately conspired to falsify them'. Until KPMG can sign up to such a Code how can we know they did not have a part in mis-stating the results?