The Auditing Practices Board has issued a feedback statement following its consultation in October 2009 on whether there should be a ban on auditors providing non-audit services to their audit clients (as recommended by the House of Commons Treasury Committee).
The overwhelming majority of respondents to the APB’s consultation opposed a ban but there was agreement that transparency and governance needed to improve to address the perception that auditor objectivity and independence were adversely affected where the auditor provided non-audit services. The APB is therefore consulting on amendments to its Ethical Standards including restructuring services in respect of an audited entity in distress, contingent fees and conflicts of interest.
The FRC is consulting on amendments to its Guidance on Audit Committees. The proposed amendments are intended to assist audit committees to determine whether a company’s auditor should be permitted to provide particular non-audit services and to improve disclosures on non-audit services in the annual report. The amendments include:
- establishment by audit committees of a list of non-audit services for which specific audit committee approval is required;
- a requirement for the audit committee to consider whether the auditor is best placed to undertake non-audit work and to disclose such decisions in the financial report; and
- a requirement for financial reports to detail the level of fees paid to auditors for audit services, audit related services and non-audit services.
Both consultations will close on 23 October 2010.
Click here for the APB feedback statement and consultation.
Click here for the FRC consultation.
