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Finance Minister Kaag has shared the fourth status report for Kwartiermaker’s future accounting sector with the House of Representatives. Based on research in the audit-only model, the quartermasters see no reason to further explore a structural division.
Quartermasters Marlies de Vries and Chris Fonteijn are “cautiously positive” about the latest developments in the accountancy profession. In doing so, they refer, among other things, to various root cause analyzes “with the right depth” provided by the AFM and working groups in the NBA, for example on fraud and continuity.
In consultation with the sector, the NBA has also presented plans that go beyond the task given to the quartermasters. “This shows that the sector is not shying away from relevant potentially uncomfortable topics, such as the issue of confidentiality versus the duty to report.”
At the same time, the quartermasters see that there is still a need for big steps in the sector, especially in culture, education and innovation. They encourage the sector to show more courage to experiment, for example in innovation, fraud and continuity.
New legislation should not take too long either, and they are therefore asking the minister to speed up the bill for the upcoming Accounting Act. After discussion in the Council of Ministers, this bill was recently forwarded to the Council of State for advice.
Research in structural models
The quartermasters will only give their overall opinion on the various studies and the trial with regard to the construction models when all studies have been completed. This will happen with their final report in 2023. However, the ‘audit only’ economic SEO study has now been completed. The report on this was also presented to the floor by the minister.
In the report, SEO notes that ‘structural separation’ brings certain disadvantages, while it is not certain whether this leads to the desired improvements for the quality of statutory audit. The quartermasters see no reason in the report to further investigate a structural division of audit and advice. However, they see the added value of placing additional demands on the transparency of the audit and advisory branch of audit firms. The district masters are happy to discuss further analyzes with the sector and the minister.
In addition, after a “difficult run-up”, research into the intermediate model was also started, under the supervision of the UvA. “In particular, corporate enthusiasm to participate was limited,” the quartermasters said. The support from accounting firms and the registrations from intermediaries was positive.
The quartermasters also draw attention to chain responsibility. Several root cause analyzes and findings by the fraud and continuity expert group set up by the quartermasters show that it is indispensable to strengthen the chain. The sector has repeatedly expressed the desirability of a ‘in control statement’ emphasizes.
The quartermasters understand the sector’s disappointment at the publication of the consultation on a new code for monitoring Corporate Governance. As far as de Vries en Fonteijn is concerned, so be it in control statement are regulated by law, and they ask the Minister in their status report to consult with the Minister of Justice and Security about the necessary changes to the law.
Minister Kaag shares the quartermasters’ view that chain responsibility is important, but believes that a in control statement not yet necessary, according to her letter to the House. It prefers to expand the declaration already required under the Corporate Governance Code. “If the expansion of the code’s statement is not taken up by the new commission that starts on January 1, 2023, I will enter into a dialogue with the minister for legal protection to see how legal anchoring is possible,” says Kaag. The work of the current monitoring committee will be completed by the end of 2022.
The theme of culture requires constant attention from the quartermasters. They insist that the NBA Culture working group has come up with a good root cause analysis and agenda, and that the culture theme is increasingly seen as a common thread from the various working groups and root cause analyses, such as in fraud and continuity.
In the discussions with supervisory directors in auditing companies, they find that they take their task in the area of culture (change) seriously. This strengthens the quartermasters in the opinion that it is desirable to expand the auditing companies’ scope of work with a mandatory board of directors and expand their powers, as proposed in the bill.
The district masters have organized many round tables and other discussions around the theme of education. The result is that a thorough recalibration of training is necessary. The training is overcrowded, and the quartermasters have heard several times and from different sides that the strict application of the CEA targets is experienced as an obstacle.
In a reassessment, not only the content of the education and the connection between education and permanent education should be taken into account, but also the legal framework; especially the distribution of power between the parties involved in the education. According to the quartermasters, the current design of the training system and the distribution of power hinders the necessary recalibration and changes.
It is therefore necessary to amend the Accounting Professions Act. The quartermasters advise the minister to set up a committee that can create the necessary innovation. The attractiveness of the study and thus the profession is an important point of attention in the reassessment.
The quartermasters also state in their report that the sector can and must innovate more. Account tech within the NBA is cited as a good example, but steps can also be taken at an organizational level.
Discussions within the sector show that accounting organizations do not make the use of data analysis mandatory for individual tasks, but leave it to the teams. The quartermasters note that, as a result, insufficient data analysis is used in general. They call on audit organizations to give more direction to this and to create more explicit space for innovation.