Gavin Hinks, Accountancy Age, Thursday 13 May 2010 at 00:00:00

Standard Life?s outspoken head of corporate governance has laid into auditorsover the standard of audit reports


Guy Jubb, head of corporate governance at Standard Life, has clashed with thehead of the UK?s biggest accountancy firm over audit reports. While Ian Powell,the head of PwC, insisted that extra detail could not be added to reports forindividual companies, Jubb stood his ground and insisted it could.

What?s happened?

In front of 100 influential accountants, businessmen and regulators, Jubbattempted to demonstrate that auditors could offer much greater detail in theiraudit reports, which he dismissed as ?riddled with get-out-of-jail-freeclauses?. His attack climaxed with the dire warning that auditors need to changeor ?wither on the vine?.

A seasoned public debater, he does not shy from delivering even the harshestof views. Indeed, Jubb has a history of expressing spikey comments. Jubb waspart of the Standard Life team that demanded a meeting with the chairman andchief executive of British Airways when the Terminal Five opening wentdisastrously wrong. He publicly scolded the Bradford & Bingley managementwhen they refused potential buyers access to detailed accounts, and he wassceptical about the remuneration package handed to the new CEO of Marks &Spencer. Most memorably of all he lashed out at the bonuses offered toexecutives at Shell and was quoted saying he was ?dismayed? by the pay packageof former CEO Jeroen van der Veer.

City desk reporters are always ready to call on Jubb because he doesn?tappear to hold back when he has a complaint to air.

But if his opinion on audit reports was hard to hear it would have been evenmore difficult to swallow because Jubb is himself an ICAS-trained accountant,though his career has been in corporate finance, venture capital and fundmanagement.

What happens next?

The examination of audit reports will enter a new phase. In effect Jubb?sforthright comments were the opening salvoes of a wider examination of whataudit reports should be achieving by the FRC. The regulator seems to be on amission and clearly wants to involve more investors in the issue, which tunes innicely with Jubb?s view that it will take audit committees, auditors andinvestors to make real progress on the problem.

Jubb is a member of the Association of British Insurers? investmentcommittee. The ABI is, of course, the former home of the FRC?s new chief StephenHaddrill and its new investment adviser Peter Montagnon. Jubb, therefore, wouldhave been articulating a view that is very familiar to the new regulators ofaccountancy. And the more that view is reported, the more it is likely to becomeaccepted wisdom and the easier it will be for the FRC to bring about change thatauditors could find very uncomfortable.