PracticeAuditNAPF urges audit shake-up

NAPF urges audit shake-up

The balance of power over how auditors are appointed could shift in favour of shareholders if the government adopts radical proposals for change suggested by the National Association of Pension Funds.

Link: PCAOB to allow firms to provide tax services

In a letter to minister Jacqui Smith, NAPF recommends alternative arrangements be introduced for the appointment and oversight of auditors, such as using a shareholder panel or a regulator.

NAPF, whose members account for more than £600bn of pension fund assets, also urged ministers to require more disclosure for shareholders on the terms of engagement and auditing procedures ahead of any vote to appoint or reappoint auditors.

Concerns are also raised over plans to reduce reporting periods – a US trend that the association claims ‘puts stress on the quality and delivery of audits’.

NAPF’s submission is part of a DTI ongoing consultation into director and auditor liability that aims to bolster public confidence in financial reporting in the wake of a series of corporate accounting scandals in Europe and the US. NAPF together with other affected parties will meet with DTI ministers tomorrow (14 Dec).

Government proposals to limit auditor liability on a proportional basis and protect auditors ‘from defamation suits by management where they are providing information in good faith’, are backed by NAPF.

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