Hermes, which has a formidable reputation for challenging company boards, said shareholders should be given much greater information about the inter-relationships between executives, non-executives and their auditors.
The comments renewed the debate on audit firm partners joining their clients’ board – Airtours, whose financial director was a former Andersen partner, this week faced demands to sack the embattled Big Five auditor.
Michelle Edkins, director of corporate governance at Hermes, said: ‘It is not wrong to appoint [former auditors] but it is important shareholders are confident there was the appropriate due process for making appointments to the board.’
The calls came as ICAEW president Michael Groom and UK senior partners from Deloitte & Touche, KPMG and PricewaterhouseCoopers all lobbied for improved global audit and accounting standards at the World Economic Forum meeting in New York.
Sir Howard Davies, chairman of the Financial Services Authority, said the US could learn from the UK’s regulatory environment.
Speaking to delegates at the conference, held at New York’s Waldorf Astoria Hotel, Sir Howard said: ‘The UK profession argues that the arrangements for the oversight of auditors and audit quality are somewhat more robust than those in the US.’
The FSA chief outlined options to combat threats to auditor independence, including the compulsory rotation of auditors and limits on non-audit work.
But he admitted it was still possible a scandal on the scale of Enron could happen in the UK.
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