Big Four no longer good source for NEDs
UK boadrooms are in the grip of a shortage of suitable non-executive directors following new requirements introduced in the Combined Code and fears over auditor independence.
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Recommendations introduced following the report by Sir Robert Smith, say that every audit committee should have at least one member with ‘significant, recent and relevant financial experience’.
Traditionally, these candidates have been found in the Big Four firms, but ‘given the controversy over auditor independence, Big Four audit partners are finding it more difficult to take up non-exec roles’, said Joelle Warren, a headhunter from Warren Partners.
She added: ‘We’ve also seen a significant increase in demand for non-execs with backgrounds in the banking and financial sectors. This in turn is reducing the pool of non-execs from non-competitors available to these financial institutions.’
As a result boards will need broaden the scope of their searches and to allow longer for the recruitment process, Warren explained.