Wyman warns over non-exec restrictions

Independence requirements on non-executive directors are tedious and
prohibitive according to an influential Big Four partner, who wants to see a
change in the corporate governance structure for audit firms.

PricewaterhouseCoopers’ global head of regulatory affairs, Peter Wyman, said
independence rules are making it hard to find candidates for non-executive
director positions within big audit firms.

He described a situation where non-executive directors were trawling through
their shareholdings, insurance policies and mortgages, searching for any
potential conflicts of interest before accepting non-executive roles.

‘The restrictions are just completely prohibitive and I don’t think anyone
would agree to be a non-exec on those terms ­ I know I wouldn’t,’ he said.

He also said the interconnected nature of audit work meant it was difficult
to find non-executive directors with no potential conflict of interests.

Wyman believes an alternate structure might involve an advisory group which
meets in parallel with the board. He believes this could provide oversight
without attracting onerous independence restrictions.

The Institute of Chartered Accountants for England and Wales has released a
discussion paper on the issue, in which it says it ‘doubts whether any firm
would conclude that it could not, as a practical matter, appoint appropriate
independent non-executives’.

‘Such a conclusion would raise serious questions about market concentration
and its impact on the public interest,’ the report said.

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