Sue Almond, technical director says: 'The issue for ACCA is about ensuring that the audit report focuses on the need of investors – this was a point made in a recent report by ACCA and Grant Thornton called Putting investors at the heart of the financial system. But this is a real challenge also for the preparers of the audit report. We urge them, and investors, to offer their feedback to this important global consultation too.'
ACCA has already been working on the future scope of the auditor’s report. This issue was considered at a roundtable for investors held in May.
The roundtable showed that:
- Investors felt the market structure had failed in relation to the provision of audit services and some regulatory intervention was needed.
- Auditor reporting needed to be enhanced with more information given on audit judgements.
- The role of audit committees in representing shareholder interests in the audit process was crucial. Some audit committee chairs needed to be more aware of this and 'open up' more to investors.
- While there should be an upper limit on the length of an auditor's tenure, audit committees should be given considerable flexibility to justify the retention of auditors to that limit.
Sue Almond adds: 'Our discussions have shown that investors place a great deal of importance on the role of the audit committee to represent their interests. As one institutional shareholder pointed out at our recent roundtable: We cannot speak to all the auditors of companies we hold shares in. We have to trust the audit committee – they should be accountable to shareholders and explain why a firm is being kept on. We have to rely on the audit committee to stand in our shoes and to represent our interests in calling the auditors to account and ensuring the auditors are doing their jobs properly and effectively.’
Sue Almond concludes: 'Investors should be the primary focus for global financial and accounting standards, yet their voices are not being clearly heard. What the audit profession should be aiming for is transparency and measures to meet the needs of shareholders. This is a timely consultation and ACCA will be making a full response by the deadline of 8 October 2012.'