Letter: Ethical audit

Sir: At a time when principles of good professional practice all too often seem to come second to commercial considerations, the "Chinese Walls" judgment in the KPMG case (report, 16 September) is very welcome.

That judgment is about people in the same firm acting for opposing parties, and has resonance for professions other than accounting. There is however another, more common and more profound threat to the exercise of independent judgement in accountancy.

Practices engaged as auditors use their position to identify other business services which they can sell to the companies they audit, with the aim of becoming general business advisors. This is done as a matter of policy, and as firms get larger so they are able to offer more services and embrace their clients ever more intimately.

Now, company directors should no doubt be free to buy all their business advice at one stall, if it appears to them, however misguidedly, that that gives the best outcome. However, audit is not business advice; it is a crucial check - with a strong public interest element - upon a company's reporting of its results. Auditors ought to stand as nearly as possible at arm's length from the subjects of their inquiries. Year by year, the commercial orientation of the accountancy sector is making this independence less and less attainable.

If we cannot look to the accountancy profession to secure the necessary degree of independence, the alternative has to be to protect the public interest by regulation from outside the profession. I should be very interested in readers' - and The Independent's - views on the form such regulation might take.

C J HOLLAND

London SE3