ICAI welcomes new accountancy publications

The Institute of Chartered Accountants in Ireland (ICAI) has indicated its support for two publications this week from the Federation of European Accountants (FEE) on audit issues.

The publications are entitled se are FEE Study on Mandatory Rotation of Audit Firms and EC Recommendation on Statutory Auditor’s Independence in the EU and Comparison with the Independence Section of the IFAC Code of Ethics for Professional Accountants: Considerations on the Implementation of the Framework Approach.

The first publication addresses the issues involved in the call for greater rotation of audit firms. By examining best practice across the European Union the study concludes that audit rotation can damage audit quality.

FEE’s second publication this week addresses practical measures that can be taken to ensure the independence of auditors.

ICAI itself recently published a document entitled Fraud - Meeting the Challenge through External Audit’ in line with President, Terence O’Rourke’s intention to bring audit issues to the fore during his presidency.

Commenting on the publications, Terence O’Rourke said: "These are two important documents. One counters the simple sounding notion that by continuous rotation of audit firms that issues of conflict can be avoided by pointing out that it takes a number of years before any auditor can acquire full awareness of a company and its business.

"Excessive rotation would hinder that learning process and possibly impact on audit quality at precisely the time that the capital markets require more confidence in procedures.

"FEE’s second publication deal with practical ways in which recommendations in the as yet unadopted revised eighth directive can be incorporated into existing best practice."