SINGAPORE - A key international accounting body will begin debating whether to require auditors to notify the authorities about suspected illegal acts, said International Ethics Standards Board for Accountants (IESBA) voting member and PricewaterhouseCoopers partner Kwok Wui San.
"That's a highly polarised debate," he said on Monday at a panel discussion during a corporate ethics and governance seminar jointly organised by the Institute of Certified Public Accountants of Singapore (ICPAS) and Harry Elias Partnership.
"We're all split."
A proposal was floated before the IESBA board in August this year requiring that an auditor, who suspects that illegal acts with public-interest implications are carried at an audit client, for instance, should raise those suspicions with the relevant authorities if higher management does not address those acts adequately.
If implemented, the recommendation will be adhered to by most of the major accounting firms and in major jurisdictions.
There is no clear policy at the moment about what auditors should do when they suspect a client of being involved in illegal acts, Mr Kwok said.
Impending changes in Singapore's Companies Act will, however, require auditors of public companies to disclose their reasons for resigning to regulators - an issue Mr Kwok said IESBA members will be discussing in the next few weeks.
The proposal touches on a number of highly complex issues for the accounting profession.
These include the practice of client confidentiality, the appropriate amount of responsibility that auditors should bear and the ideal method of implementing an ideal.
"The controversial issue is whether each country's government or regulator is responsible for making the accountant report, or should it be the duty of the profession to compel its fellow constituents to report," said Mr Kwok, who described the proposal as a reflection of some stakeholders' views of the auditor's public-interest role and a move towards keeping the profession relevant.