Gerald Russell, a senior partner at
Ernst & Young, made the prediction
following a corporate governance survey by the firm which found that one in five
blue-chip directors felt they were not qualified to act as audit committee
Russell said the eighth directive – set to come into effect from June 2008 –
would exacerbate this situation by laying down strict experience requirements
‘A member of the audit committee will have to have knowledge of accounting
and/or auditing, which goes beyond the description of “general recent and
relevant experience”, which makes the position more demanding,’ said Russell.
‘Accounting and auditing have changed so much in the last two years, with new
rules, such as IFRS, that a lot of people feel less qualified. This is one of
those requirements that has crept up unseen.’
Audit committees are under increasing pressure, not least from the mid-tier
who feel they are dominated by Big Four alumni.
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