The audit industry has put on a warm reception for the arrival of its first
corporate governance code, which it says broadly codifies existing practice.
The major firms spent the last seven days preparing statements in
anticipation of today’s release, which was welcomed.
Ian Powell, chairman and senior partner with PricewaterhouseCoopers, said the
code will “effectively codify the way in which PwC’s governance structures
He conceded that the firm will have to appoint non-executive directors, but
said “our thinking on how best to embrace this principle and its implications is
In the lead up to today’s release, the firms had complained about the
difficulty of finding non-executive directors that meet independence criteria.
With clients in all market sectors, across the globe, the firms foresaw a
potential nightmare in tracking down non-executive directors who were
independent enough to satisfy the code.
Scott Halliday, managing partner Ernst & Young UK & Ireland, said he
supported “the principle” of appointing independent non-executives.
“We believe that they can make a valuable contribution to effective audit
firm governance because they can bring different perspectives about the risks
and opportunities an audit firm faces in the provision of high quality
services,” he said.
John Griffith-Jones, senior partner with KPMG UK, said the code would largely
codify the existing practices which had been put in place since the Enron
“The profession has reformed itself a lot since Enron and I think this proves
and shows we have made the proper steps and here we are codifying all the things
that we do and we are proud of,” he said.
Simon Michaels, managing partner with mid-tier firm BDO, said non-executive
directors have been part of his firm’s structure for more than a year.
“We recognise that, if the code is to be successful in promoting choice in
the audit market, we need to be open and transparent in our reporting of the
practices we have in place to ensure we deliver high-quality audits,” he said.
Scott Barnes, CEO of mid-tier firm Grant Thornton, said with the economy
under pressure, it is particularly important that the investment community has
faith in the quality of auditors.
“Our practices are already in line with many of the Code’s provisions and we
have already begun the process of recruiting independent non-executives with
suitable experience and expertise who will bring a useful external market
perspective,” he said.
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