FSA wants auditors to inspect internal controls
New proposals put forward by the City watchdog will require auditors to review a company's internal controls.
Link: Stricter controls needed to fight staff fraud
The proposals by the Financial Services Authority cover the 10 key audit and accountability areas set out in the new combined code on corporate governance, based on the recommendation by Sir Derek Higgs.
They are contained in Miscellaneous amendments to the Handbook (No.14) published last month, but only came to light today.
Under the plan auditors will have to look at a company’s risk systems in detail and the control systems put in place by its management.
Stricter controls needed to fight staff fraud
Peter Wyman, head of regulatory affairs at PricewaterhouseCoopers is reported in the FT as saying the proposal would put ‘significant upward pressure on audit fees over the next few years’.
In the US, audit fees have risen by 25% to 35% because of work on internal controls.
The moves are designed to set out clearly the areas of responsibility for auditors, following recent accounting scandals such as Parmalat and Enron.