PracticeAuditCorporates shun investor audit demands

Corporates shun investor audit demands

Moves to open up the workings of audit committees have featured in regulatory attempts to reform the audit market

Investors are set to be rebuffed in attempts to have more information on
audit committees, after a meeting of senior company directors held last week by
the Audit Quality Forum saw strong criticism of the proposal.

Moves to open up the workings of audit committees have featured in regulatory
attempts to reform the audit market.

John Buchanan, chairman of Smith & Nephew, who was present at the AQF
meeting, said ‘no good case had been made for separate audit reports for
shareholders’.

‘That is the board’s job, even though some investors would like more
[information],’ he added.

‘It was seen as important for the chairman to have strong relationships with
internal and external auditors as well as management. That would enable the
chairman and committee to conduct cross-checks of what is going on.

‘And strong relationships would require pre-meetings and open-ended
discussions, where the auditors can be asked what concerned them most about the
company and what issues they would like to see on meeting agendas,’ Buchanan
said.

Investors have suggested that they would like improved engagement with audit
committees. The Market Participants Group, a body working under the auspices of
the Financial Reporting Council, has even suggested a shareholder vote on audit
committee reports.

AQF chairman Gerald Russell said: ‘Investors may want more information about
accounting judgements and these should be part of reports from executive
managements of companies.

‘It isn’t the purpose or point of the audit committee to communicate the
financials of the company, it’s the job of the company.’

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