AUDIT independence and professional indemnity insurance remain two of the biggest issues facing the accounting profession, according to the outgoing president of the Institute of Chartered Accountants in Australia (ICAA).
Perth-based Geoff Brayshaw will end his 12-month term as ICAA president, and more than six years as an ICAA board member, at the end of the year.
His plan for 2003 is to focus more time on his position as managing partner of BDO Chartered Accountants and Advisers.
Mr Brayshaw’s term as president will be remembered for the ICAA’s provocative “work to regulation” protest against the Australian Taxation Office.
The campaign, launched in August, was designed to improve service delivery for tax agents from the ATO.
“Our only regret is that we didn’t do it earlier,” Mr Brayshaw said.
“They took it seriously and they have come out with a number of changes. One of the biggest results was greater recognition of the role of tax agents.”
In light of the progress to date, the ICAA will wait until February 2003 before deciding whether to implement its “work to regulation” threat.
However, Mr Brayshaw notes that “there are still a lot of issues upsetting our members. We have every intention to maintain the pressure”.
He believes the debate on audit independence, fuelled by high profile corporate collapses such as HIH and Enron, had been “totally unfair” to the audit profession.
“It’s a much wider issue related to corporate governance,” Mr Brayshaw said.
Specifically, it also relates to the role of directors and management and the difficulty of auditing complex organisations.
Hence, there needs to be a continued focus on improving the skills and competence of auditors.
Mr Brayshaw said he was pleased the ICAA had helped to raise the standard of debate on audit and corporate governance issues.
However he remains concerned about proposals to give the force of law to audit standards, which could ultimately lead to auditors facing criminal sanctions.
He is also concerned about the flow-on effects of the crisis in professional indemnity insurance, especially in regional Australia.
As well as charging higher premiums, insurance companies are excluding certain activities, such as auditing and financial planning, from their PI policy renewals.
“They are forcing firms to look at what kind of practice they are. Lots of small firms will pull out of audit and that will have a big impact in regional areas,” Mr Brayshaw said.
The institute is advocating a move towards proportional liability and a ‘capping’ of claims.
“One of the highlights of the year is that this has progressed quite considerably,” he said.
