Warning over ethical audits

News Article - 01 October 2007
Category: Regulatory

Ethical auditing has both the potential for positives but also for concerns, a major accountancy body has said.

The Institute of Chartered Accountants of Scotland (ICAS) claimed that the practice is something of a "double-edged sword", improving the profile of ethical accounting but also potentially increasing the costs faced by small companies.

According to ICAS, some medium-sized enterprises stand to lose out if they are not included within the Provisions Act for Small Entities, designed to protect the lower-level operations.

James Barbour, ICAS' director of accounting and auditing, called for action that would keep audit regulations in "the spirit" of European commission proposals.

"The APB [Accounting Practices Board] should consider extending the use of the Provisions Available for Small Entities to medium-sized companies where the owners and management are one and the same," he explained.

In July the APB chairman Richard Fleck said ethical standards are a step forward in the wake of the Enron scandal.

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