The conservative culture within accounting firms hinders the improvement of the sector. This is the conclusion of two quartermasters who, on behalf of the Ministry of Finance, have investigated the accountancy sector over the past 3.5 years and have ‘driven’ it to implement improvements.
The two quartermasters, former chairman of the Board of the Netherlands Authority for Consumers and Markets Chris Fonteijn and Marlies de Vries, former chartered accountant and assistant professor of Behavioral Risk Management at Nyenrode Business University, presented their final report on the sector to outgoing Minister of Finance Sigrid on Tuesday in The Hague. Kaag (D66). They conclude that the accountancy sector is “under heavy pressure”.
The image of the sector is not good, partly due to various scandals. The growth of young, fully trained accountants is stalling. Accountants are given more tasks and in the meantime the incentive within accountancy companies is still mainly aimed at running production.
The quartermasters believe that no new rules are needed, but that the accountants themselves should provide more counter pressure. However, this requires an ‘independent attitude’ and a ‘professionally critical attitude’. “We see that many individual accountants are motivated and of good will,” said De Vries. “But we see that the sector as a whole is slow and risk-averse.”
Welcome speech
The quartermasters also investigated the possible splitting up of accounting firms. Now, within the walls of the larger offices such as EY, PwC, KPMG and Deloitte, advice is given to companies as well as checks are carried out to determine whether a company’s figures are correct and what risks a company runs. In the past it has been suggested several times that a division of these tasks could improve the quality of the audit.
However, the quartermasters see that there is currently no reason for this: any advantages of unbundling do not outweigh the disadvantages, such as more financial uncertainty. An office earns more with advice than with accountancy work.
Fonteijn and De Vries received their assignment in 2020 from Kaag’s predecessor Wopke Hoekstra (CDA), after a number of very critical reports had been published about the accountants and the quality of the statutory audit. These reports were in turn drawn up in response to a number of scandals in which accountants had failed in their audit function, such as the fall of DSB Bank and fraud at Ahold, Vestia and Ballast Nedam.
In their speech, the quartermasters called on the sector to stop endless consultations and really get to work on the many recommendations that have already been made.
Minister Kaag agreed in her reception speech: “Poldering is sometimes good. But sometimes poldering is done to avoid making a decision or to find the lowest common denominator. The sector should not now say: we are going to investigate even more. No, he has to say: we are going to act. Accelerate implementation. I hereby appeal to your professional honor.”