ICAEW makes brave move on small firm regulation
Small firms will welcome yesterday's decision by the ICAEW to simplify the annual return for member firms. But will the Financial Reporting Council?
The institute's quality assurance department is offering a new format for those members due to file a return from September onwards. Some have been sent out already, following pilots by volunteer firms. The new format (sample returns can be seen here) should be easier to complete as there is less information that firms need to provide - it is now almost half the length of the previous version with the institute reducing the information required about clients and turnover.
While lighter-touch regulation is (almost) always to be welcomed, the timing of the move is interesting.
Last week Paul George, director of the FRC's Public Oversight Board, warned smaller firms may have to merge because of a decline in audit quality.
He told Accountancy Age TV: 'There's been deterioration in the grading [on the quality of audits]. Year on year, there's a different population but I think it's an interesting trend, which illustrates the challenge that many firms have of keeping up to date with all of the many regulatory demands that are placed on them.' (He makes further comments on audit quality and direction here and here).
The body's report to the secretary of state said that all the institutes' audit monitoring units had witnessed a downward shift in the quality of audits.
Of course there have been plenty of talking heads on hand to say it's not quality that's declining but the compliance burden that's increasing. And the latter is certainly true.
In many ways the ICAEW is damned if it does reduce the compliance burden on hard-pressed small firms and damned if it doesn’t.
Nevertheless acknowledging a decline in audit quality on the one hand and seeking to solve it by reducing regulation on the other is not going to be an easy sell if there is any evidence of a further decline in quality.
Interesting observations Damien. Don't know if it is me but the inline TV player is aweful. Keeps stopping for no apparent reason, cannot fast forward, skips to the next show. Yuk. Sorry.
Posted by Dennis Howlett | August 24, 2007 3:21 PM