PKF DEBATE CALLS ...

PKF DEBATE CALLS FOR BETTER COMMUNICATION AND MORE ROBUST AUDIT STANDARDS 26 June 2002: As the news of the $3.8bn fraud at WorldCom was announced last night, PKF was hosting a debate entitled 'Burning Issues, sleepless nights - the changing role of professional advisors' chaired by John Wosner, PKF Chairman. This examined the increasingly difficult 'between a rock and a hard place' role of the auditor and possible solutions to rectify public misperceptions about the power of the auditor to prevent fraud. The speakers included John Whittingdale MP, the Shadow Secretary of State for Trade & Industry; Tom Simmons, Chairman of the Accounting Standards Committee of the Quoted Companies Alliance (QCA); Roger Housechild, Director of Technical Policy and Development at the ICAEW; and Tony Upson, PKF Director of Assurance and Advisory Services. There was some sympathy from the floor that the accountancy profession cannot prevent the stupidity, greed or fraudulent behaviour of company directors and that many of the failures of financial reporting have been caused by management and not auditors. But it was also acknowledged that auditors need to communicate better with the public. Roger Housechild of the ICAEW said that the UK profession needed to respond very quickly to prevent itself from being vilified in the same way as US auditors and there was no room for complacency. Mandatory auditor rotation to ensure independence has not proved itself to be a viable solution and a more pragmatic solution would be to strengthen the role of the company audit committees. 2. Tony Upson, PKF Director of Assurance and Advisory Services, stressed that independence was a poor surrogate for objectivity and that the real need was for better business morals rather than regulation. "The biggest antidote to financial misreporting is robust auditing but this can only be done if the auditors have strong internal mechanisms and a culture of integrity to withstand pressure from the directors and stick to their high standards." John Whittingdale MP, Shadow Secretary of State for Trade & Industry, agreed that "self-regulation and transparency were better than the blunt instrument of legislation." John Wosner, PKF Chairman, accepted that the profession had done little to manage the public expectations of what can and cannot be achieved through an audit and was now reaping the whirlwind of poor communication. The floor also felt that the accountancy profession is often made the scapegoat for the failure of the capital markets to give good advice - particularly in the IT, dotcom and telecoms sectors. Tony Upson said that financial reporting had become so theoretical that many industry analysts were unable to relate to the information that the reports provided. In summing up to the audience of more than 30 senior company directors, John Wosner, identified three ways forward for the accountancy profession: better communication to help counteract unrealistic expectations, higher standards to withstand commercial pressure from directors, and a stronger role for company audit committees. Further information: Melissa Byrne PR Manager Tel: 0207 782 9335 Notes to editors: 1. PKF is the eighth largest firm of accountants and business advisors in the UK with more than 1,600 partners and staff operating in over 25 offices around the country. Principal services include assurance and advisory; consultancy; corporate finance; corporate recovery and insolvency; forensic; and taxation. The firm has particular expertise in sectors such as charities; technology and e-commerce; hotel and leisure; inward investment; medical; professional partnerships; and public sector. PKF's web site address is www.pkf.co.uk. PKF also offers financial services through its FSA authorised company, PKF Financial Planning Limited. 2. PKF is a member of PKF International, which has more than 8,000 partners and staff operating in 110 countries. PKF International is an association of legally independent firms. 3. The principal place of business where the list of partners' names is open to inspection is 78 Hatton Garden, London, EC1N 8JA. PKF is registered to carry out audit work and authorised to carry on investment business by the Institute of Chartered Accountants in England and Wales. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/06/26/20020626BIT01330/wkr0001.doc http://www.waymaker.net/bitonline/2002/06/26/20020626BIT01330/wkr0002.pdf