Audit partners will have to sign off audits personally and audit engagement letters will have to be published, under proposals put forward to the government.
The proposals, made to the government by the Audit Quality Forum, were the first in four key areas of audit aimed at improving the service shareholders receive.
They will be put to the DTI, which is currently deciding whether to push forward with legislation to allow auditors to negotiate proportionate liability with their clients.
A meeting on Monday of the AQF, under the chairmanship of Ernst & Young partner Gerald Russell, saw the forum agree the proposals. Legislation would need to be amended to ensure audit partners sign audit reports, while new rights for shareholders shareholders to put questions to the auditor in writing before an AGM are also being proposed.
The requirement to disclose engagement letters would be included in the combined code on corporate governance. Existing law would need amending to require auditors to provide details of the circumstances surrounding their resignation.
The AQF will now switch its attention to the issue of competition, with work expected to start towards the end this month.
‘There are a number of complex interrelationships between competition, quality and choice. The working party has suggested commissioning a number of items of research to provide evidence to support the next stage,’ said Tim Bush, chairman of the forum’s competition working group.
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