Audit watchdog tightens non-audit rules
Proposals to increase the oversight of auditors providing non-audit services find strong support from the profession and companies
THE UK’S financial watchdog is to tighten the rules around the provision of non-audit services following a consultation on auditor ethical standards.
Responses to the Auditing Practices Board’s (APB) proposals on ethical standards found strong support to increase the oversight of auditors providing non-audit services to their clients.
While most respondents were against total prohibition of such services, they acknowledged that there can be a perception of a loss of independence where certain non-audit services are provided by the auditor, especially when the ratio of non-audit fees to audit fees is high.
The APB’s proposals to increase the rigour with which auditors assess threats to their independence, introduce a new non-audit services disclosure regime and increase the role of audit committees in overseeing the retention of a company’s auditors to undertake non-audit services received overwhelming support.
“The changes introduced, taken as a whole, represent a significant tightening of the requirements in relation to the provision of non-audit services by auditors and introduce a new approach designed to address investors’ perception concerns through greater transparency,” said APB chairman Richard Fleck.