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ACCA has responded strongly to accusations by the APB that the profession is failing to rise to challenging audit standards. ACCA President John Brace says that professional accountants have always done so, and that the problems of the ethics rules have caused by the APB imposing standards designed for the top end of the market onto small business.

The following is reproduced from the Financial Times letters column, 23 February 2005:

Sir,

Richard Fleck, Chairman of the Auditing Practices Board, (letters Feb 17) implies that the accountancy profession’s criticism of the APB's recent Ethical Standards for Auditors was somehow caused by having to rise to the challenging standards set by the APB. Nothing could be further from the truth. The profession is fully committed to continuing to uphold the highest ethical principles and has been requiring its members to observe them throughout the last century.

It is ironic that Mr Fleck says he felt compelled to rebuff the article 'Accountants say APB is hurting their good name' (February 10) but then proceeds to do just that. He asserts in effect that auditors believe that they can audit the product of their own accounting work without adequate safeguards to protect their objectivity. This is an affront to the whole auditing profession that reveals many of the underlying reasons why the APB Ethical Standards are inappropriate.

The APB had a chance to align its new standards to the internationally accepted IFAC Code of Ethics but failed to do so. This means that all auditors in the UK and Ireland have to comply with two sets of ethical requirements and clients have to pay for that.

The IFAC Code, which is enforced via the accountancy bodies, recognises that there are many safeguards to independence and objectivity. The APB Ethical Standards leave out perhaps the most effective safeguards of all: those that make accountancy a profession – that is the training, experience and discipline that instil a commitment to objectivity that goes beyond mere rules.

The 'recent failures and resulting regulatory action on both sides of the Atlantic' that Richard Fleck refers to, in order to justify his standards, are of zero interest to the small and medium-sized enterprises (SMEs) that make up the engine room of the UK economy. The APB's insistence on applying rules suited only to the audits of large listed companies is what caused a record level of adverse response not only from the profession but from business organisations and individuals.

The APB’s lack of understanding of the SME market appears to have caused them to misrepresent the profession’s legitimate concerns. Until the APB's membership is radically changed to include a majority of those who understand SMEs it will struggle to issue standards that are genuinely in the public interest.

John Brace
President, ACCA

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