Only 2% of people think that the Institute of Chartered Accountants in England and Wales should benefit from fines for poor auditing

Posted on May 23 2022

I wrote an article on Friday for AccountingWEB in which I suggested it inappropriate that the Institute of Chartered Accountants in England and  Wales profited by £55 million as a result of audit fines paid in the last two years by firms that they regulate when I think it that Institute's job to ensure such failures did not happen. I should add that I am a fellow of the ICAEW.

I highlighted the blog in this tweet:


In fairness, the ICAEW responded, saying:

I have to say that I am not convinced. A willingness to accept change does not alter the fact that the ICAEW has already been unjustly enriched, in a fashion that to me has the risk of moral hazard written all over it. We also know that the chance of any real change in audit regulation is very low right now, despite what has been said in the Queen's Speech. Simultaneously, audit fines appear to be rising inexorably as continuing catalogues of failure by the big firms continue to emerge.

There is also no indication in these tweets as to what part of the public interest in accounting this £55 million might serve. I can suggest many uses, but none is noted in the tweets, and nor have I found any meaningful reference elsewhere. I have also seen no suggestion that anyone is being consulted on this issue, including the ICAEW membership.

In that case, I put a poll on Twitter to assess public sentiment on this issue:

I do not pretend that this is necessarily representative, but it was interesting that the voting pattern stabilised very quickly around the eventual outcome, which really could not be clearer.

The ICAEW option of it using the funds could be covered by a charitable use, but that was not the implication of the question, and is rather ruled out by the first option. The option that stands out is that the victims of audit failure should be compensated, which seems entirely logical. I suspect it occurred to no one that these fines should go to the Treasury.

I will be sharing this result with the ICAEW and will be asking for a further response.

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3 Responses

  1. Bill Hughes says:
    May 23 2022 at 10:03 am

    You would think after the fiasco of the Carrillion audit which meant that a new hospital in Liverpool had to be abandoned for some time halfway through construction that something would have been done to ensure adequate auditing. Liverpool health authorities certainly need compensation.

  2. alex thomson says:
    May 23 2022 at 7:32 pm

    I liken the fines as very similar to the position of the FCA who “keep” all their fines some of which are very substantial. Indeed, they see fines as legitimate income but quite how they estimate that in their projections for the annual Business Plan. one wonders

    I suspect that ICAEW do not operate the same high level compulsory compliance processes as the FCA do for their 55.ooo authorised firms so they could the decent thing and consider a payment to charity?