US auditors told to include more detail in reports

 
Marion Dakers
AMERICA’S accountancy watchdog has voted to bring in sweeping new rules on audits for listed companies.

The Public Company Accounting Oversight Board, set up in the wake of the Enron scandal, said yesterday auditors should go beyond the current practice of giving just three boilerplate paragraphs of opinion alongside a pass or fail mark.

The new rules, which have been almost three years in the making, are the biggest shake-up to US audits since the 1940s, the PCAOB said.

Auditors would need to disclose “critical audit matters” to investors and declare their independence from the client company as well as the length of their tenure.

A public consultation, a second PCAOB vote and a rubber stamp from the Securities and Exchange Commission are all needed before the rules come into force.

KPMG and PwC said last night that they “strongly support” the efforts to make US audit reports more informative.

Regulators on both sides of the Atlantic are pushing to make auditors more accountable following the collapse of Enron in 2001 and the failure to flag up distress in the banking industry ahead of the credit crunch.