Review Board examines impartiality of auditors
A close examination of audit and non-audit fees is to be made by the new accountancy regulator in a bid to see if they affect the impartiality of auditors.
The Review Board is poised to finalise its working programme over the next few weeks and it has emerged it will be looking, initially, at one of the most controversial areas in finance news.
The review is likely to compare non-audit fees paid to audit firms with fees paid to a third-party firm.
Board chairman Colin Reeves said: ‘We want to look back at cases in the past, Anglo-Enrons if you like, and really question if the environment has changed. And to see if what we are doing now takes into account past mistakes.’
Broadly, such a review would include statistical and conceptual analysis with the help of the UK’s largest accountancy firms to investigate whether the provision of non-audit services to audit clients causes auditors to act impartially.
The Review Board is also looking at how it can play a role in the review of auditor rotation. The Financial Services Authority will start its own examination this month of the UK’s listing rules which will include auditor rotation.
Any regulatory changes to the appointment of auditors would have an impact on at least 10,000 non-listed companies that would fall under the remit of the Review Board which is overseen by the Department of Trade and Industry. All company auditors are licensed under the 1989 Companies Act which is overseen by the DTI.
