Dennis Howlett signals the start of a further round if discusssion on this massively important issue.
If the large-company audit structure collapses, what takes its place?” That’s a discussion yet to start.
This is a topic that’s incredibly difficult to parse as we’ve yet to witness the reality of a partial, let alone complete collapse of the audit profession. That means we don’t yet know how any fallout will be tackled by partners in those firms despite the fact risk managers know they are staring at the abyss.
I tend to agree with Dennis; the solution is not a state audit. Those have a tendency to deliver results like the recent IMF assessment of Jersey: evidence of meaningless compliance with the form of rules where the substance is abused.
But if the state is not to deliver the result the state has a key role in ensuring it is delivered. This means audit firms are auditors and no more. This means auditors will never review their own work. This means auditors will also be fully transparent about what they do. And this means auditors will not lobby against transparency and accountability as they do now.
And most of all - accounting will be brought into democractic control. We cannot have the Big 4 dominated International Accounting Standards Board setting rules for nation states which do not deliver that those states need to pay tax, the regulators of those places need to assess risk, the people of those places need to hold the companies they grant limited liability to account.
And let's also be honest: auditing is meaningless if data is not on public record. And locally accountable. So the conference I am at on transparency (at which only PWC from the Big 4 are present) is critical. As is country-by-country reporting. And I'll be presenting on that later today.