ICAI expresses reservations on auditor independence

The Institute of Chartered Accountants in Ireland (ICAI) has expressed reservations about the proposed ethical standards on auditor independence.

The standards were published by the Auditing Practices Board in a consultation paper entitled 'Draft Ethical Standards for Auditors.'

Terence O'Rourke, Institute Deputy President, said: "ICAI shares the goal of the APB to enhance the reality and perception of auditor independence.

"Unfortunately the standards have been developed with the large public interest companies in mind and have then been applied to all including the smallest of companies.

"The result is that detailed and onerous rules will have to be applied to small and medium sized companies where there is no real (or perceived) threat to independence."

He said that what may be appropriate for large public interest entities, may not be appropriate for the smaller companies.

O'Rourke said a possible consequence of these new rules is that small companies may not seek advice because of the cost involved in consulting a second source.

In closing, he said that the ICAI does not disagree with what the APB is trying to do, but believes it has got the balance wrong in this case.