Audit Practice under Scrutiny
Byline: Kit Bingham
Board audit committees are receiving the brunt of reformers' attention in the wake of the Enron and WorldCom collapses.Last week a leading body representing the UK accounting profession recommended new best practice standards for audit committees, while Philips, the Dutch electronics firm, published a new policy on auditor independence.
The standards recommended by the Association of Chartered Certified Accountants (ACCA) aim to strengthen the independence of audit committees, enable them to have a much bigger say in the appointment and activities of external auditors and reduce the influence of executive directors in audit matters.
ACCA recommends that companies ban auditors from providing non-audit services, such as financial system consultancy, which could jeopardise their independence as external auditors.
Audit committees should be required publicly to justify the reappointment of auditors who have served for more than a defined period - say, five to seven years - publish annual reviews of the independence of the external auditors and justify the provision by auditors of any permitted non-audit services.
Non-audit fees should also be disclosed more comprehensively, according to ACCA.
Anthea Rose, ACCA chief executive, says: "There is still much that needs to be done to rebuild the confidence of the global investment community in published company accounts. …