One of the great advantages of coming to end of my full-time at City, University of London, is that I'm beginning to get more time to work on the issues that really concerned me now. high on this list is the future of accounting and auditing. This is why I, with others, have launched the Corporate Accountability Network. In this context I note the FT reporting:

Deloitte has asked the government whether it could head off regulatory intervention with a self-imposed restriction on the number of large listed companies it can audit.

The proposal, which it would introduce only if rivals followed suit, could open the door to more mid-tier firms in the audit market for FTSE 350 companies, all but 13 of which are audited by Big Four firms. Under the plans, each firm could be restricted to 20 per cent of the market.

“We are looking at voluntary measures to meet [regulatory] objectives and have raised these with the department for business,” said Stephen Griggs, Deloitte UK head of audit. However, he flagged concerns that a collective move by the Big Four could be perceived as breaching competition laws.

I apologise to the FT for the length of the quote: contextually it is necessary. I should add that in the same article Tabby Kinder, who now covers these issues for the FT, also notes minor personnel changes at both KPMG and PwC, also intended to anticipate changes in audit regulation.

I took part in a discussion on those anticipated changes with academic researchers, yesterday. They asked me if I thought that there was any regulatory change to the current system of audit that would achieve the goal of delivering better audits. My answer was emphatic, and was 'no'.

The problem we have with audit, I argued, is not that there are only four large auditors ( although that is an issue). It is instead that the accounts that we have do not meet the needs of stakeholders and they are audited in accordance with a framework that does not require the expression of a true and fair view, but does instead require confirmation that a particular set of inappropriate rules have been applied in the production of those accounts. Until, I suggested, such time as the whole conceptual framework accounting is reformed, audit is re-established so that it requires the expression of a subjective opinion on the part of the auditor on the truth, fairness or otherwise of the accounts that they have reviewed nothing will change the quality of the audits that society currently suffers.

In that case what we are seeing is the auditing firms re-arranging the deckchairs in a desperate attempt to maintain the existing structure of accounting and auditing, which they have of course created through the International Financial Reporting Standard Foundation and the International Auditing and Assurance Standards Board, and it is that structure of auditing and accounting that really has to change now.