KARACHI, Feb 9 The proposal of Securities and Exchange Commission of Pakistan (SECP) to develop a panel of auditors out of members of Institute of Chartered Accountants of Pakistan (ICAP) for appointments as statutory auditors of companies in different sectors may render a large number of chartered accountants and auditors out of job.

At present, there are around 3,864 chartered accountants and firms registered with the ICAP. Out of these 2,331 are in the southern region and 1,533 in northern region. Members practising as sole proprietors are 284 and 316 as partners.

The remaining members belong to mostly medium- and small-size partnership firms with two or three partners.

These professionals have raised questions about the logic and wisdom of the SECP`s move and strongly feel that it would only create unemployment because the criteria set to qualify for registration with the SECP panel of auditors would not allow more than three to four big firms to stay in the field and the rest will have to wind up their professional set-up.

Most of the chartered accountants contacted by Dawn believe that around 386,400 professional people working in different cadre of audit firms will lose their jobs if the SECP goes ahead with its plan of panel of auditors.

It is being argued that at present there are 3,864 members registered with the ICAP and if at an average each firm (sole or partnership) employs 10 qualified persons or those to be qualified they will be thrown out of job

These professionals pointed out that by fixing such a criteria the SECP might reduce the number of audit firms to mere half a dozen but it would in no way ensure quality and ethical services.

In support of their argument the chartered accountants said that if the SECP was in any way taking these measures in the backdrop of Enron, then it will have to be reminded this oil giant was audited by one of the largest audit firm -- Arthur Andersen.

Enron was founded by Arthur Andersen and Clarence Delaney, both of Price Waterhouse. Does the size assure ethics and money in big numbers corrupts, they asked.

These professionals have also rejected the SECP`s claim that 25 firms would qualify and would be included in the panel. The chartered accountants said that it was a discriminatory move on the part of the commission and would never be accepted.

They were of the strong view that less than half a dozen `big and mighty` audit firms would be picked up under the laid-down criteria.

The most damaging aspect of the SECP`s proposed auditors` panel would be that it would encourage monopoly in auditors and chartered accountants profession and would leave no room for any new entrants. The people would avoid enrolling themselves with those faculties which impart education in accountancy.

The chartered accountants further said that if the intention of the SECP was to ensure quality of audit even then it would be a futile exercise because the ICAP was already taking care of the issue.

An independent Quality Assurance Board is working, which include members nominated by the SECP and State Bank of Pakistan. The board also has the non-practising ICAP members, which eliminates the possibility of discrimination or favouritism.

They further argued that the SECP, under the Companies Ordinance, 1984, is empowered to proceed against auditors in cases where defaults are suspected in financial statements. The commission was already exercising its powers and on several occasions had penalised defaulting members, they added.