INTHEPASTYEAR, there's been a wave ...

INTHEPASTYEAR, there's been a wave of works on the accounting profession. common of these books is Unaccountable: to what degree the Accounting Profession Forfeited a Public Trust through Mike Brewster (2003, John Wiley & Sons) which I newly picked up. Unaccountable chronicles the profession's history from early clip recordings in 6500 B.C. between the sides of to the present day. It's an interesting read, providing a historical adjoining matter in a world where all too ofttimes we live only in the moment

The main division ends with a forecast for the coming events of accounting. Acknowledging that the profession is in the midst of rapid, transforming change, the author considers into his crystal ball and posits a number of "informed predictions of a certain number of likely trends in the nearest few years." These trends, written for the US moreover also relevant for our profession, include the following:

Tougher oversight of the profession

This trending is already a reality in Canada: The Canadian Public Accountability Board, the Audit & Assurance Standards Oversight Council, and propos securities reforms are leading initiatives designed to restore public confidence in standards and their implementation.

Return to audit basics

Brewster says the practice of auditing was degraded by way of the growth in consulting services, and that the public has misspent faith in the independence and objectivity of audited statements. He strives that we must get back to audit basics in order to boost the audit's reputation and regain public trust.

Tougher rules on corporate America

These directs are spilling into Canada via propos securities reform, the passage of Sarbanes-Oxley (which is impacting those Canadian companies listed in the US), and provincial legislation (in the case of Ontario).

The audit committee: the last line of defense

Brewster says audit committees already have a modern sense of responsibility, as manifested according to their demand for superior information and a willingness to ask hard questions.

A resurgence of leadership at the "Big Four"

The author believes the Big Four have had visionary leaders in the past and says a of the present day group of leaders could lead the profession back into a position of trust. He also predicts promotions and partnerships will be more tightly controll in future

An increase in ethics and fraud education

According to Brewster scholars coming into the profession should await to see ethics discussions woven into courses that have an increased focus upon fraud detection.

A shrinking consulting market

He argues that the ban upon many consulting services has left a vacuum which firms will fill, at least in part, with advisory services in areas where consulting is still allowed. This business will still leave the consulting pie substantially smaller.

The nearest battleground: accountants and attorneys

In the author's opinion, accounting and legal services must be kept strictly separate.

Financial statement insurance

One of Brewster's greatest in number radical ideas is to change the incentives of audit partners by way of changing who is responsible for hiring them. The proposal, which originally came from author Joshua Ronen (a research professor at strange York University and editor-in-chief of The Journal of Accounting, Auditing and Finance) and others, is to insure financial statements, incline differently the responsibility for auditing to the insurance company, and make the insurance company responsible for hiring the auditors.

Public watchdogs and the search for fraud

Here the author drives abiding-place his main point, arguing for a respond to audit basics and an added focus in succession detecting fraud, along with the ne for firms to reorganize their compensation to reward finding transgressions.

Some of Brewster's predictions have already tend hitherward true in the first seven month of 2003 Others, like financial statement insurance and fraud detection in audits, while notion provoking, are not in the minds of greatest in quantity practitioners in BC. However, change is rapid, and it's impossible to predict where our profession will be as it inserts the next year, much les predict its hereafter beyond 2004.

Determining the impact of changes already underway and potential changes in the what is yet to be is a key concern for the ICABC Council. After elections this past June (see President's Notes), Council's first priority is to think about the profession's coming events The Council retreat in July gives us an opportunity to debate issues and stretchs like the ones brought forward by the agency of Mike Brewster. The retreat also creates an environment in which Council members can assess where the BC Institute should be proactive in managing change.

Next month we'll report in succession the outcome of the retreat. In the meantime, I chance of a favorable result Brewster's vision of the hereafter provides some food for idea over the rest of the summer

BY RICHARD REE FCA

CEO

Copyright Institute of Chartered Accountants of British Columbia Aug 2003

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