A top executive has warned that auditors could refuse to sign off company accounts if companies do not adhere closely to a new standard and provide a welter of legal documents, Accountancy Age reports.
Ken Lever, a FTSE 100 finance director at Tomkins, said that the propsed rule would mean firms have to provide written representations of their controls. Auditors may reject accounts if they are not completely sure about them.
"If directors provide the representations that are needed and the auditor concludes the representation is not reliable, the auditor can disclaim opinion on the financial statements," he said.
His comments concern the consultation regarding ISA 580, a draft of which has been issued by the US-based International Federation of Accountants.
"There has to be careful consideration that this does not lead to a requirement on companies to produce excessive amounts of information when these things can be achieved in another way."
He expressed concern that the standard could be used as a way to get companies to do more and more things, adding to the red tape that can hinder efficiency.
Last month the British Chambers of Commerce claimed that bureaucracy had increased the burden on business in the UK to the tune of £1.6 billion between 2005 and 2006.
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