Audit discussions could be made public

Investors could get access to the deliberations of companies’ audit committees, under plans being discussed at a high level among the six largest global accounting firms.

Investors are discussing the idea with the firms, amid increasing pressure from institutional shareholders who believe the private discussion between auditors and audit committees are key in explaining critical issues that may face the companies they invest in.

Grant Thornton audit partner Steve Maslin is facilitating discussions on behalf of the Global Public Policy Conference ­ an annual meeting of the six largest networks.

‘In the medium term we’re trying to raise awareness about the generic nature of these communications… and trying to explain the audit standards and regulations around these and the different rules of different territories,’ said Maslin.

‘This may also result in giving investors tools to ask questions of audit committee chairs or auditors, about the issues that they want addressed,’ he added.

Proposals are not yet publicly available but institutional investors are looking at draft ideas and questions about the consequences of disclosure of discussions between the auditor and audit committee.

‘To some extent this information is for the market… but the market and investors need to think carefully about the consequences of what it is calling for.

‘Some information put out about public companies could disadvantage them when they are competing with private companies,’ he said.

However PricewaterhouseCoopers’ global head of public policy and regulatory affairs Peter Wyman said it was still early days for the discussions.

‘What we have recognised for some time is that dialogue with the audit committee is very important and it may well help investors if they understood some of that dialogue.

‘We don't doubt that there are very interesting things to explore... but you have to find a way to deliver that information to all shareholders at the same time and in a way that doesn’t create any confidentiality problems,’ said Wyman.