A top fraud lawyer has warned accountants seeking to expand their audit function by becoming anti-fraud “policemen” of consequential increased liabilities, confusion and conflict of interest.
David Kirk, partner at top fraud firm Simons Muirhead & Burton, said advisers and businessmen should know the risks of fraud.
But he told delegates at an Institute of Chartered Accountants in England & Wales (ICAE&W) conference last week that better and more visible regulation would be more of a deterrent than the creation of a “neighbourhood watch” environment among advisers.
Auditors in the biggest firms, already facing negligence actions running into millions of pounds, are in some cases keen to acquire a fraud-busting “forensic auditing” role which could merely add to their liabilities and actions against them.
The ICAE&W talks launched the discussion paper Taking Fraud Seriously. It marked the start of a campaign by the institute's audit faculty for more concerted action against fraud, which it said costs UK industry up to £10 billion a year.
The paper examines the roles of advisers, clients and the law. Recommendations include reviewing and codifying fraud law, a new legal duty on regulators to report suspected fraud to auditors, and review of the auditor's role relating to fraud.