Auditor/audit committee talks should be in annual reports

DISCUSSIONS BETWEEN auditors and audit committees should be summarised and included in annual reports.

Some of the UK’s top investors, speaking at a Lords inquiry into the audit market, said that investors would benefit from knowing issues discussed between auditors and audit committees.

When asked by the Lords Economic Affairs Committee whether such information would spook investors, they said the effect would be to the contrary.

“It would redress a balance, where annual reports are becoming marketing documents for management,” said one investor.

Iain Richards, regional head of corporate governance at Aviva Investors, said that such summaries were welcome. He used the example of previous worries that the use of the going concern statements in financial reports would act as self-fulfilling prophecies and cause companies to collapse. But, in practice, citing ACCA research, more companies had been saved as “it allows issues to be dealt with earlier”.


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