A survey by the Institute of Chartered Accountants in England and Wales (ICAEW) of 25 audit committee chairs found that they felt the case for wholesale reform had not been made because there was no clear evidence that a problem with external audit either caused or accelerated the financial crisis. But they believe that some areas, such as increasing competition and choice, could be improved, with respondents showing support for greater openness in the tendering process.
There were significant concerns about the cost of joint audits. Most respondents felt that existing safeguards for auditor independence worked well, but did acknowledge the need for more effective communication and greater transparency in the audit process.
The audit committee chairs also supported greater use of third-party and peer reviews of audit practices, such as those carried out by the Audit Inspection Unit. The survey found these are widely used already.
Respondents also said that there were greater demands on their time after the financial crisis. There was consensus that the audit committee’s role must be clearly defined and should not compromise or replace that of the main board, especially with regard to decisions on strategic risk, business models and signing off annual reports.
To download a copy of the report visit bit.ly/EUReformSurvey