ICAEW suggests that auditors’ questions to the audit committee about key accounting judgements should be made public
The Institute of Chartered Accountants in England and Wales last week published a discussion paper titled ”Enhancing the Dialogue Between Bank Auditors and Audit Committees“.
The ICAEW describes this as a piece of “thought leadership”, setting out “good practice for bank auditors, audit committees and executive management on the fundamentals of a good auditor/audit committee relationship, the structuring of meetings throughout the audit cycle, and the content and style of reporting to the audit committee”.
This paper is a companion piece to the ICAEW’s 2010 report on “Audit of Banks: Lessons from the Crisis“.
Amongst the discussion paper’s suggestions are that the challenges made by the auditors to a bank’s key accounting policies should be made public, in the interests of transparency ”over the activities of all of those involved in the audit process”.
Purpose
The ICAEW describes its purpose in producing the paper as
“…[not seeking] to impose any new principles, rules or requirements for auditors or audit committees. It instead presents a number of observations on how to make the relationships work well. It is written from the perspective of auditing large, complex banks. The document may provide useful guidance to smaller banks or non-financial organisations although is not intended to address the different issues faced by those firms. At the end of each section it presents a summary of recommendations; auditors and audit committees can consider which of these are most relevant to individual relationships.
Part of the debate about whether audits and auditors served any use in the run-up to financial crisis
The paper is published in the context of the debate about role of auditors in the financial crisis, including the damning criticisms of auditors made by the House of Lords Economic Affairs Committee in March 2012 and the European Commission’s proposals for reform of the audit market.
See also: OFT refers large-firm audit market to the Competition Commission
Big Four accountants are just too credulous, says audit watchdog
Are auditors sceptical enough?
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