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.