Do you find it difficult to make out head and tail of company accounts? If yes, cheer up that you aren't alone. The bosses of international audit networks are confused too!

In a document released only days ago in Paris, the CEOs of big accounting firms such as PricewaterhouseCoopers (PwC), KPMG, Grant Thornton, BDO International, Deloitte, and Ernst & Young (E&Y) have called for radical reforms in the current systems of reporting.

They have acknowledged that what we, as investors, need is `information that is relevant, reliable, timely, simply presented and comparable across jurisdictions'. And also, info that can help us measure past performance and make projections for the future.

This is possible only if `principles for reporting financial information' are `as close to identical in all countries as possible'. In which case, we may have to unlearn what little accounting we already know!

Give accountants scope for judgment, rather than turn them into box-checkers, pleads the document, grandly titled `Serving Global Capital Markets and the Global Economy'.

But, as Financial Times pointed out, the paper is `long on idealism and short on detail,' uncharacteristically for accountants.

Such as, in this snatch from the Paris paper: "What is sorely needed is a constructive dialogue among investors, other company stakeholders, policy makers and our own professionals about what should be done to close or at least narrow the `expectations gap' relating to fraud."

Fraud, as you know, is `intentional material misstatement'. And the CEOs believe that the topic is the subject of most confusion. As a result, "there is a significant `expectations gap' between what various stakeholders believe auditors do or should do in detecting fraud, and what audit networks are actually capable of doing, at the prices that companies or investors are willing to pay for audits."

At the time of writing, there is this news from www.nation.lk - that two of the leading chartered accounting firms in Sri Lanka are to face `a disciplinary committee appointed by the Institute of Chartered Accountants Sri Lanka (ICASL) over misconduct of its members during the privatisation of the Sri Lanka Insurance Corporation (SLIC)'. This is the first time in the history of the institute that two of the country's leading accounting firms (PwC and E&Y) will be investigated by a disciplinary committee, adds the news story.

Reverting to the accounting document, one finds a denial of any problem with concentration in the audit profession. "There are substantial economies of scale in auditing and worldwide networks require significant investments. Thus choice may always be somewhat limited for the largest multinational companies, but even with limited choice, healthy competition exists in the marketplace," aver the CEOs of the big firms.

Disturbingly, though, Heather Stewart writes on http://observer.guardian.co.uk about `dangers of auditors' domination'. His article dated November 12 speaks of how `the four accounting giants audit almost every firm in the FTSE 100, and dominate the US and European markets'.

No wonder, therefore, that the Financial Reporting Council, which oversees auditors in the UK, is urging investors and FTSE 100 firms "to ready themselves for the disastrous possibility that one of the big four goes bust." Scary?

D. Murali