THE ROW in America about revealing the names of auditors on corporate accounts has been downplayed by the chairman of KPMG, the auditor hit by an insider trading scandal earlier this month.
“I don’t think it’s important. I think it’s quite misleading,” global chairman Michael Andrew said yesterday.
“There are much more fundamental things that need to be done to restore confidence in investors than just having the individual partner designated on the account sign his name.”
KPMG’s head of audit in Los Angeles, Scott London, was this month charged by the Securities and Exchange Commission with passing tips about two of his audit clients to an acquaintance in exchange for cash and a Rolex watch.
London’s identity was a mystery at first, with neither KPMG nor the two clients, Herbalife and Skechers, confirming his name, leading to speculation during trading hours over which firms had been affected by London’s leaks.
The case has given fresh momentum to the US Public Company Accounting Oversight Board’s long-standing proposal to identify all auditors classed as “engagement partners”.
Narrower rules have been in place in the UK since 2006, without a discernible effect on audit practices, according to Henry Irving, head of the audit and assurance faculty at the ICAEW.
“I think there was some scepticism about what the unintended consequences would be, but investors wanted it and it’s been largely accepted,” he told City A.M. “If your name is going to be put at the bottom of an audit report for a large quoted company, it seems to me that it’s going to focus your mind on the audit quality.”