'People will forgive you for being wrong, but they will never forgive you for being right - especially if events prove you right while proving them wrong.' Thomas Sowell
Global accounting watchdogs identified serious problems at 40 per cent of the audits they inspected last year, raising fresh concerns about the quality of work being carried out by the world’s largest accounting firms.
According to the International Forum of Independent Audit Regulators, accounting lapses were identified at two-fifths of the 918 audits of listed public interest entities they inspected last year.
The audit inspections focused on organisations in riskier or complex situations such as mergers or acquisitions, according to the IFIAR, whose members include 52 audit regulators around the world.
The most common issue identified by these regulators was a failure among auditors to “assess the reasonableness of assumptions”.
The second biggest problem was a failure among auditors to “sufficiently test the accuracy and completeness of data or reports produced by management”.
The findings have intensified concerns about weaknesses in the auditing process, an issue that has been thrust into the spotlight over the past 12 months following a string of high profile accounting failures.
These include the collapse of BHS and Carillion in the UK, a corruption scandal involving oil company Petrobras in Brazil, and the share price collapse of South Africa’s Steinhoff after the retail conglomerate admitted to a series of accounting irregularities last year.
Prem Sikka, an accounting expert and emeritus professor at Essex University, said the frequency of problems identified by the IFIAR was “terrible”.
“There are a whole range of issues and there is no simple fix. There is a huge knowledge failure in the audit industry which is not being looked at. The whole industry is ripe for reform. The question is where is the political will for this?”
The accounting industry has faced significant reputational problems in the UK in particular. KPMG came under heavy criticism from politicians last year for giving HBOS a clean bill of health shortly before the UK bank collapsed during the financial crisis. KPMG has also been criticised for declaring Carillion a going concern last March, 10 months before the construction company went into liquidation.
The report showed that 41 per cent of the problems identified by audit regulators last year related to independence and ethics. These included accounting firms failing to maintain their independence due to financial relationships with clients, and failing to evaluate the extent of non-audit and audit services provided to clients.
Many firms also failed “to implement a reliable system for tracking business relationships, audit firm financial interests, and corporate family trees”, the IFIAR said. Its research was based on feedback from 33 audit regulators who inspected the work done by 120 audit firms.
Karthik Ramanna, a professor at Oxford university’s Blavatnik School of Government, said the number of firms with issues around independence and ethics was “absurdly high”. He added that the research would reinforce concerns about a lack of competition in the audit market, which is widely viewed as being dominated by the ‘Big Four’: EY, Deloitte, KPMG and PwC.
“The auditing industry is so concentrated, once the largest firms set the standard for poor conduct, the whole industry is dragged down,” he said.
Brian Hunt, chairman of the IFIAR, told the FT: “We would like the firms to focus on getting better. We need them to think about how they come at this a bit differently. The firms are making progress — we would like to see it happen a bit faster.”
Deloitte said: “We remain focused on continually improving the quality of services we provide to our clients. We look forward to continuing our constructive engagement with our audit regulators.”
A senior surgeon has triggered controversy after telling junior female doctors to go along with sexual abuse at work for the sake of their careers.
Australian vascular surgeon Dr Gabrielle McMullin drew criticism for comments made at the launch of her book - Pathways to Gender Equality.
Speaking in an ABC radio interview after the event, she said she encouraged women in her field to protect their climb up the professional ladder by “complying with requests” for sex.
The Sydney-based surgeon said sexism is so rife among her colleagues, young women should probably just accept unwanted sexual advances because speaking out would tarnish their reputations.
Dr McMullin, who studied medicine in Dublin, Ireland, said she stands by the comments she made on Friday but that her advice was “irony”.
"What I tell my trainees is that, if you are approached for sex, probably the safest thing to do in terms of your career is to comply with the request," she said after the launch.
Her shocking comments triggered angry reactions from sex abuse and domestic violence campaigners, who claimed her remarks were “appalling” and “irresponsible”.
Dr McMullin told ABC's AM program the story of Dr Caroline Tan, a young doctor who won a sexual harassment case in 2008 against a surgeon who forced himself on her while she was training at a Melbourne Hospital.
Dr Tan didn't tell anyone what had happened until the surgeon started giving her reports that were so bad they threatened the career she had worked so hard for.
But McMullin warns complaining to the supervising body is the 'worst thing' trainees could do.
“Despite that victory, she has never been appointed to a public position in a hospital in Australasia,” she said. “Her career was ruined by this one guy asking for sex on this night.
“And realistically, she would have been much better to have given him a blow-job on that night.”
Dr McMullin's comments have been roundly criticised by others in the medical profession and in women’s rights groups.
But she said many people had thanked her for speaking out and some had come forward with more appalling stories of their experiences.
She said her critics had misunderstood her stance.
"Of course I don't condone any form of sexual harassment and the advice that I gave to potential surgical trainees was irony, but unfortunately that is the truth at the moment, that women do not get supported if they make a complaint," she told the ABC.
"And that's where the problem is, so what I'm suggesting is that we need a solution for that problem not to condone that behaviour.
"It's not dealt with properly, women still feel that their careers are compromised if they complain, just like rape victims are victimised if they complain," she said.
One victim, who did not want to be identified for fear of losing her job, told the ABC she experienced years of sexual harassment from a senior surgeon.
The victim said if she revealed her identify, she would not be considered a safe person to work with.
"If you complain... you'll be exposed, you'll be hung up to dry, you won't be able to work," she said.
"You'd be seen as a liability, that's my opinion. You absolutely would be seen as a liability moving forward.
"It's well and good that the legislation and laws say x, y and z but that wouldn't happen in practise. It would be unlikely to."
Kate Drummond, chair of the Women in Surgery committee at the Royal Australasian College of Surgeons, disagreed with this suggestion.
"I think we have robust processes, not only through the college for the trainees but also through the workplace," she told the ABC'S The World Today's program.
"I mean, these are people who work in hospitals and there are clear workplace processes to deal with these kinds of problems.
"And so I think there are parallel processes that we would encourage people to use and also to take the support of people like those of us in the Women in Surgery committee and we're very happy to strongly support these people."
Ms Drummond said there had been less than one complaint per year to the Women in Surgery committee regarding sexual harassment.
