Key considerations for Audit Committees around matters on their external auditors and financial reporting.
Regulators and investors place too much emphasis on easy-to-quantify measures of independence as a proxy for measuring quality, according to the economia Value of Audit roundtable hosted in Singapore by KPMG. Many agreed that while maintaining independence was important, talk of audit quality has focused on structural issues, such as audit tenure and the cap on non-audit fees.
To read more on the Singapore roundtable, click here.
To read more on the Global roundtable series, click here.
We explore the current state of the audit – where audit quality stands today, drivers and indicators of audit quality, and various stakeholders’ expectations of auditors – and what the near-and-long term may hold for auditing. Is audit quality continually improving? What are the key drivers and indicators? Should the auditor’s report be expanded beyond the “pass/fail” audit opinion? What innovations can companies expect to see in auditing in the next 3 to 5 years?
As businesses develop their responses to the outcome of the UK referendum on continued EU membership, the business-as-usual of preparing financial reports and auditing continues. There are some immediate accounting and reporting implications to consider when preparing half-yearly and annual financial reports.
This companion guide is designed to help Audit Committee members and others by providing a structured guide to the key issues arising from the standards.
Audit reports continue to evolve. The pace and extent of future change are important issues and the views of audit committee members are very relevant to that debate. This report puts forward the case for audit committees to consider, and engage with shareholders, about where they should be on the spectrum ranging from meeting the minimum requirements of auditing standards, through to the inclusion in the audit report of graduated findings and detailed audit risk maps.
The report also promotes debate on the interpretation of the EU audit reform requirement for the auditor of public interest entities to report “observations, when relevant” for periods commencing on or after 17 June 2016.
Audit Committee members are responsible for initiating and supervising the audit tender process and for recommending the best auditor to suit the needs of the business. This guide is put together to help the audit committee member approach the tender process in a way that makes it a really worthwhile process – one that delivers lasting benefits for the organisation.
Responding to calls for additional guidance, the Financial Reporting Council (FRC) has issued a ‘Practice Aid’ to assist audit committees in evaluating audit quality in their assessment of the effectiveness of the external audit process.
We surveyed 32 FTSE350 audit committee chairs who had changed auditors as a result of a tender during the last 3 years. We asked questions about the transition process, handover from one auditor to another, impact on the business, the degree to which tender ‘promises’ had been delivered and the challenges of transition.
Regular audit tendering and rotation is now a reality. During our recent series of ACI Technical Updates we took the opportunity to explore the perceived risks and benefits of changing the external auditor with around 150 audit committee members.