The body that sets ethical rules for U.K audit firms has published its expected consultation paper on the cross-selling of audit services, reopening a debate that has long dogged the accounting profession.

The paper is the first step in a process that could lead to new restrictions on the services that accounting firms are allowed to sell to their audit clients. Currently firms are able to sell such services, subject to certain safeguards.

However, an influential Parliamentary committee published a report on the banking crisis in May that called for a total ban on the practice. It concluded: “We strongly believe that investor confidence, and trust in audit would be enhanced by a prohibition on audit firms conducting non-audit work for the same company.”

The consultation paper from the Auditing Practices Board, part of the Financial Reporting Council, is seeking to establish whether investors agree with that view, said APB Chairman Richard Fleck.

Separate to this consultation, the APB is also reviewing its ethical standard that controls when firms can sell internal audit services to their external audit clients. KPMG came in for criticism recently when it emerged that the firm was marketing an integrated assurance product that combined internal and external audit work. The APB said the Audit Inspection Unit, its sister body, was monitoring how well firms are following its ethical standard “in light of recent market developments.”

Topics