Consultation paper on auditing firms providing nonaudit services to listed companies that they audit


19-10-2009 Consultation paper on auditing firms providing nonaudit services to listed companies that they audit
The Auditing Practices Board is seeking the views of all stakeholders – investors, companies and their directors and management, accountants and other interested parties – on the following questions. In respect of listed companies: 1. (a) Do you think that the provision of non-audit services by accounting firms to their audit clients currently impacts confidence in the independence of auditors? (b) Are you aware of any instances where the provision of non-audit services by accounting firms to their audit clients has or may have adversely affected audit quality? 2. If you do consider that the provision of non-audit services has adversely affected audit quality or currently impacts confidence in the independence of auditors please identify which non-audit services are of concern. 3. In the light of your answers to questions 1 and 2, do you think that there needs to be a change in the approach taken by APB to the setting of standards relating to the provision of non-audit services by auditors to the entities that they audit? 4. If you think that there should be a change in the current arrangements, would you advocate: Complete or more extensive prohibitions on the provision of nonaudit services by accounting firms to their audit clients within the Ethical Standards for Auditors; The imposition of other requirements through the Ethical Standards for Auditors (and if so which); More active corporate governance – e.g. so that non-audit service engagements were required to be pre-approved by the company's board of directors or audit committee; Better (and more extensive) disclosure in financial statements. 5. In setting the standards relating to auditor independence, do you believe regard should be had to the perceived benefits that are derived by companies from the provision of non-audit services by their auditors? If your answer is yes, please provide specific examples of these benefits and indicate the magnitude of any cost savings that arise. Read the full report.