Newly appointed Institute of Chartered Accountants Scotland (ICAS) president Sir David Tweedie said the profession requires a “natural evolution not revolution” and improvements to audit committee reporting should be made.
Tweedie said the average audit engagement of a FTSE 100 company of 48 years is “getting a bit cosy”.
“We need get audit committees to say they will look at retendering every now and again and after a while, let’s say 15-20 years, change the auditors or explain why not,” he said in the International Accounting Bulletin webinar Secrets of Success.
Tweedie believes audit committees need to play a larger role and become more transparent in their reporting to the shareholders and investors.
“Presently the audit committee report is really about what I’m not responsible for and what management is responsible for and that’s ok, but that could be in the appendix,” he said.
“At the moment it’s just about ‘yes’ and ‘no’ and what you need is to know what where the major going concern assumptions. I would like to see what were the critical issues and estimates that matter to these accounts. And, I do think that will come”
The former International Accounting Standards Board (IASB) head also emphasised the importance of regulators and auditors working closer together in order to better tell the “full story of a business and reflect economic reality”.
“Lessons in all quarters are being learnt from the global financial crisis. There is work to be done in restoring confidence and trust in business and in the profession – including preparers of financial statements and auditors. Increased transparency and clearer communication will be pivotal to this,” Tweedie said.
Tweedie, who played a pivotal role in influencing global accounting standards, will start his new role on 20 April.
Tweedie said one of his major goals as ICAS president is to emphasise the importance of professional ethics.
“We want to get the practitioner back to the students and telling them war stories and what they are going to need to look out for as they start to practice,” he said.
Tweedie said he wants to bring the profession closer to young people from a deprived background.
“There are a lot of bright kids who don’t go to university or get bewildered by it and it’s about how we get them into the profession, how we mentor them and keep them going,” he explained.
“We want to make sure bright kids, who just can’t get on to the educational ladder, get on it.”
Tweedie also conveyed the importance of defining the role of the auditor when it comes to small companies where an auditor can also act as an advisor.
“As a small company you can’t afford an accountant and a consultant and the auditor of small firms is in a different position and in a way is a trusted business advisor. There is no public interest involved in such a case and we need to remind our CAs of that and do well for the economy,” he noted.
Tweedie succeeds Iain McLaren and is joined by vice presidents Brendan Nelson, a non-executive director at Royal Bank of Scotland and British Petroleum, and Jann Brown of Cairn Energy.