Levitt’s message comes before he plans to step down from his post in mid-February.
In a letter to audit committee chairmen of the top 5,000 listed companies in the US, Levitt wrote: ‘When auditors and the board engage in frank and meaningful discussions about the significant, but sometimes grey areas of accounting, both the company’s and its shareholders’ interests are served.’
The Panel on Audit Effectiveness, established in response to SEC demands, issued a report and recommendations in August 2000 in a bid to enhance credibility of financial reports. Among the proposals is a suggestion to incorporate a forensic-type audit procedure; a recommendation the UK’s Auditing Practices Board opposes.
Levitt also urged committees to build closer ties with external auditors following the introduction of revised rules on auditor independence. The US regulator now requires auditors to inform a company’s audit committee if non-audit services provided could affect an their independence.
In conclusion, Levitt said: ‘The audit committee stands to protect and preserve the integrity of America’s financial reporting process. I encourage your committee to take every step possible to ensure that the integrity of the financial statements, and by extension, the interests of shareholders, remains second to none.’
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