EY to improve audits via independent panel
EY are responding to calls for independence among the Big Four accounting firms
While the struggle around audit quality in the Big Four accounting firms continues on, EY have created a new Independent Audit Quality Committee (IAQC).
The panel was announced by EY’s US partnership on Wednesday to provide an independent, outsider’s view on the quality of their audits, including any operations, strategy, and culture relating to it.
Consisting of three experts, the panel was chosen from groups that EY deals with regularly who rely heavily on its audit work, like investors, corporate audit clients, and regulators.
It can now be revealed that those on the panel include Jeanette Franzel, former public company accounting oversight board member, William McNabb III, former chairman and CEO of Vanguard, and Charles Noski, former Bank of America chairman and executive vice president.
McNabb will lead as chairman of the committee.
The independence of the big accounting firms has been a hot topic of discussion for a number of years, and continues to grow with recent audit scandals such as Carillion.
Experts say these firms should be subject to independent reviews of the audits they conduct.
Kelly Grier, EY US chairman, managing partner and Americas managing partner, said: “At EY we believe in the power of diverse points of view in all aspects of our business.
“Leaders of the [Securities and Exchange Commission] have also observed the benefits of independent and diverse thinking brought by outside leaders to support audit quality and the public interest.”
As this change comes in, the government’s Business, Energy, and Industrial Strategy Committee has heard evidence from John Kingman as well as investor representatives and academics on implementing actions aiming to improve audit quality in the UK.
Kingman has called once again for the abolition of the audit profession’s watchdog, the Financial Reporting Council (FRC), saying it should go “as swiftly as possible”.
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In his review at the end of last year he said the creation of an Audit, Reporting, and Governance Authority in place of the FRC should be implemented by the government.