Calls for a convergence in auditing practice

THE recent financial scandals in the United States have highlighted, as never before, the need for common global accountancy standards, according to the President of the Institute of Certified Public Accountants Brian Coffey.

Speaking at the conferring of CPA membership on 105 newly qualified Certified Public Accountants Mr Coffey said; “The nonsense of having differing national standards is again demonstrated by the fact that under Irish GAAP in 2001 Elan incurred a loss of $887 million whereas under US GAAP for the same period it made a profit of $343 million.

With urgency we must move to international auditing and accounting standards which will apply to all entities irrespective of size and which will be principles based and of the highest quality”.

Mr Coffey added; “As a profession, one of the most important lessons we have learnt from the experiences in the USA is the need to urgently push for international convergence on the training of auditors to the highest level.

The EC 8th Directive provides a common platform throughout the EU for the education and training of auditors and is a good model on which to build common international training standards”.

On the relationship between auditors and their clients, which has proven to be a critical factor in many of the company scandals, Mr Coffey said: “I believe that the proposals in Ireland on the future role and responsibilities of Audit Committees will add to the real and perceived independence of auditors. These proposals should also ensure that the problems which emerged in the USA from overly close relationships between management and auditors will be avoided in Ireland. However, as an additional safeguard, government should also consider imposing harsher penalties on directors who deliberately mislead auditors.”