External auditors could have their role expanded in the financial services
industry, according to the
paper “Corporate governance in financial institutions and
remuneration policies” flags up potentially expanding the reporting scheme by
which auditors alert the board and supervisory authorities of any substantial
risks they discover in the performance of their duties.
Greater co-operation between auditors and regulatory authorities is required,
and expanding the type of data they validate within a financial services client
would go hand in hand with increasing the range of their reporting scheme.
The paper also looks at expanding the role and importance of the chief risk
officer, as the EC attempts to put safeguards in place to prevent another
welcomes the paper and questions posed of the audit industry, it warns against
creating an “expectation gap” between what an auditor does and their ability to
provide assurance on future economic events.
“More may need to be done to explain what the audit process entails and what
goes on behind the final audit report, including the discussions between
auditors and audit committees,” said Iain Coke, head of the ICAEW Financial
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