Time to play the name game

KPMG needs another scandal like a hole in its accounts. The admission by a former US partner that he had passed confidential client information to a golf buddy comes as the big-four firm faces questions over its auditing role at the failed British bank, HBOS. Yet this should not be the end of the story. KPMG only reluctantly confirmed the identity of the rogue senior partner and two of the companies he audited. Thanks to industry intransigence, it is impossible to find out which other companies might have come under the remit of Scott London, head of KPMG’s Los Angeles office. This is not acceptable.

For years, US authorities have been fighting with the accounting industry over proposals to force the disclosure of lead auditors on company audits. US firms fear that revealing their names might heighten the risk of lawsuits. This concern seems exaggerated. Knowing a lead auditor’s name should not make a lawsuit more likely than knowing the name of the firm. In any case, the benefits of disclosure to shareholders and the public interest are far greater. There is evidence that audit quality has improved in countries where names are required.

If audit firms hope to regain public trust, the minimum requirement is that they be transparent. London, April 11