Audit committees need to disclose more info around non-audit work: ICAS

Audit committees should tell shareholders why they choose their auditor to
undertake non-audit work, an investigation has found.

ICAS has released the findings of a working party examining the thorny issue
of auditors undertaking non-audit work for their audit clients.

The long-standing issue was the subject of a renewed focus last year in the
wake of the crisis as the treasury select committee explored possible factors
which led to the downturn.

The ICAS report recommends “public, clear and detailed information” from
audit committees so shareholders understand the reasons behind choosing an audit
firm to perform non-audit work.

“There should also be a more consistent and higher quality of disclosure in
the financial statements of the quantity and nature of the non-audit services
provided,” the ICAS working group said in a statement.

The group included representatives from the investment community, the FTSE
100, audit firms and academia and said there should be no “outright prohibition”
on auditors providing non-audit services to audit clients.

The Working Group’s Chairman and Finance Director of Ignis Asset Management,
Ian Paterson Brown said, there was a very full debate on the issues.

“There appears no rationale or appetite for an outright ban on auditors
providing non-audit services to their listed audit clients,” he said.

“However, there is a need for audit committees to make public their specific
policies over procuring non-audit services and better explain their processes
for ensuring the independence of the auditor.”

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