I was more than a little taken aback reading AccountancyAge’s interview with Stephen Hadrill, the newish head of the FRC:
…the priority for us has to be that we are prepared for the worst and that is where I will put my focus,” he said.
The worst, according to Haddrill, is the global collapse of a Big Four auditor, which has the potential to throw markets into chaos.
He believes the FRC should concentrate on maintaining high standards among the larger firms while simultaneously provisioning for a collapse.
What shocks me is that the Age didn’t press Haddrill on what those plans might look like. I doubt they’d have got a straight answer but to blindly accept a focus on standards is utterly missing the point.
Richard Murphy thinks:
His failure to plan for their succession already looks like a guarantee of the end of private sector auditing to me.
Not a man to have confidence in. He believes in Armageddon and his solution seems to be to issue tin hats.
I agree. As Richard, Francine Jim Peterson and I have been warning for well over two years now, one if not all of the Big Four will collapse. No amount of posturing by regulatory bodies will prevent aggrieved stakeholders from pursuing legal remedies in light of some of the more egregious cases such as Satyam or what’s fallen out of the banking crisis. It is the weight of litigation that will trigger a collapse. Satyam alone could do that in regard to PWC. The question comes – what next? That’s where FRC and others’ focus should be placed.