IMRO reviews auditors' role after MG row
City watchdog IMRO is set to investigate the role of external auditors and the advice they give fund management companies following the debacle at investment bank Morgan Grenfell. IMRO wants audit firms to take a more active role advising the trustees which oversee the management of funds on behalf of investors.
IMRO said it was reviewing four areas of concern under its own rules and the unit trust regulations laid down by the Securities and Investments Board.
The role of trustees would be central to any review, it said, and what responsibility they should bear for monitoring controls and procedures in a fund management firm.
In addition, IMRO said it was likely that the role of external auditors would come under scrutiny along with other professional advisers which might enhance the power of the trustees to uncover any ‘irregularities’.
Several fund managers added they would welcome a wider role for auditors, but said that they would expect qualified staff to have a greater involvement in the audit and that fund management companies should pay more for their services.
‘It is a concern that paying auditors less and less will see levels of service go down,’ said one. Another added: ‘It would be dangerous if auditors went further down this road.’
Ian Plaistow, director of practice at Arthur Andersen, said that technology had allowed firms to reduce their bids for work, but ‘there must come a time when audit committees are criticised for accepting unrealistically low bids’.
IMRO was further embarrassed this week when it revealed that the investment company Newton Investment Management had been fined for its failure to maintain adequate reporting procedures.
