The ICAEW’s Audit Quality Forum meets next month to discuss its future, including areas of work it should look into, but it does so at a time when it faces difficult questions over its past recommendations and its position as an ICAEW-led body.
The group last week published for consultation an agenda of potential future projects that will explore fundamental issues surrounding the audit process. The work plan is a response to investor concerns that audits may not fully address the needs of shareholders.
But over the last few weeks further concerns about the forum have surfaced. The Confederation of British Industry has raised doubts over the recommendation to allow shareholders to question auditors at AGMs, one of four key pieces of advice made as concessions to enable proportionate liability by contract.
The Association of British Insurers has also questioned whether the ICAEW should be hosting the forum, instead suggesting that the group sit under the umbrella of the Financial Reporting Council. It argues that this would provide a greater sense of independence and authority to the group. But while the FRC is open to this idea, the ABI may struggle to find support for its stance elsewhere.
‘Is that saying the forum is being too effective or ineffective,’ said one investor member of the forum. ‘I’m perfectly happy with it where it is,’ he added.
Sparks could also fly over the issue of competitiveness among the largest firms, with a forum working group expected to bring some contentious arguments to the 23 May meeting. Investors are expected to question whether auditors deserve proportionate liability when they will win added protection simply by using international standards on auditing.
Next on the agenda for the forum will be the very purpose of the audit and how audit practice in the UK relates to what is happening in the international market.
The accessibility to investors of the audit committee will be addressed, as will auditor access to third party adviser information.
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