BRINGING AUDITORS TO BOOK
Have you noticed how auditors shirk their responsibilities? They preach
accountability to everyone else but accept little, except collecting their
fees. The long suffering public is not given any sight of auditor working
papers. Most work is done by unqualified trainees who admit to falsifying
audit work. Would you really take out stakeholder pension and invest your
savings in companies with the full knowledge that auditors are in collusion
with the management. Auditors don't owe a 'duty of care' to any individual
current/potential investor, creditor, emplpoyee, bank depositor, pension
scheme member of any other stakeholder. This hardly gives them an incentive
to do good audits.
Auditors use audits as a loss leader to secure consultancy income. This
gives them every incentive to dilute audit work. As long as a company continues
to survive, poor audit practices are glossed over. Do you really want to
take a chance and rely on current practices. We believe that the public
deserves better. So here are some practical suggestions for protecting
Write to the company auditors, let them know that you are making or have
made honest investment on the basis of audited accounts.
Every time you vote on an auditor appointment or remuneration make it clear
that as an individual you are doing so upon the understanding that the
auditor owes a ‘duty of care’ to you.
Remind company directors of the Caparo judgement and ask them to
explain what safeguards the company audit offers you. Do not, under
any circumstances, agree to a ‘cap’ on auditor liability.
Ask questions at the annual general meeting, and require auditors to explain
why they do not owe a ‘duty of care’ to individual stakeholders.
This will help to mobilise public opinion against the irresponsible attitudes
peddled by the auditing industry.
Form pressure groups with like-minded individuals and continue to ask questions.
Write to your MP and Ministers at the Department of Trade and Industry
(DTI). Ask them to explain why an individual who is owed a ‘duty of care’
when buying mundane things like sweets and crisps is not owed a ‘duty of
care’ by auditors.
Do not vote for any MP who is unwilling to do anything to protect and advance
the stakeholder interests.
Ask MPs and Ministers why you should invest your earnings and savings in
company securities (e.g. to provide pensions) when the law does not provide
you with adequate safeguards.
Remind MPs and Ministers of the iniquities of the present state of affairs.
For example, following pressures from the auditing industry, the government
has granted auditors a right to trade as limited liability companies, Section
310 of the Companies Act 1985 has been modified, Limited Liability Partnership
(LLP) laws are being introduced and the government has asked the Law Commission
and other bodies to investigate audit firm demands. In contrast, nothing
has been done to meet the demands of audit stakeholders
Urge MPs and Ministers to introduce legislation to reverse the Caparo
Examine audit firm manual, publications by the Accounting Standards Board
and the Auditing Practices Board. Note whether they run contrary to the
judgement delivered by the Caparo Law Lords. Use any such material
to assert your rights against auditors.
Bring class actions against auditors.
Pursue your action in small claims courts. This will not cost you much
but might increase inconvenience to auditors.
If you have bought shares in a newly floated company, have a look at the
Financial Services Act 1986 (e.g. Section 150) which might enable you to
sue reporting accountants.