FRC, ICAS and CAA publishes report on Audit Committees
News types: Codes and Standards Announcements
Published: 15 February 2012
Open debate and mature questioning are fundamental to the effectiveness of audit committees, according to a new report published jointly by the FRC, the Institute of Chartered Accountants of Scotland and the Institute of Chartered Accountants in Australia.
Other findings from the report, which draws on interviews with the chairs of audit committees of major companies, include:
-
that audit committees owe their primary responsibility to the board and work best when they are an integrated part of the board process;
-
that audit committee members need sound commercial and financial knowledge but not necessarily deep accounting knowledge; and
-
that audit committees need high-quality and reliable information to fulfil their role and have an important responsibility in the selection of those responsible for delivering that information.
The collaboration predominantly focused on companies based in Australia and the United Kingdom although audit committee members of companies based in other jurisdictions were also interviewed.
It sought to present an international view on view on the role of audit committees in helping their boards discharge their financial and fiduciary responsibilities to shareholders.
Commenting on the publication of the report, Chief Executive of the Financial Reporting Council Stephen Haddrill explained,
“The report highlights that investors’ demand for transparency and corporate accountability in the capital markets has placed the function of the audit committee squarely in the spotlight. It is for this reason that the FRC will shortly begin consulting on our proposals to extend the remit of, and reporting by, the audit committee, as set out in our earlier report, ‘Effective Company Stewardship’.
-
The Financial Reporting Council is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.
-
The Report is available from the FRC website at: Walk the Line: Discussions and insights with leading audit committee members. The ‘Effective Company Stewardship’ feedback statement is also available from the FRC website at: Effective Company Stewardship - Next Steps.
Document created under a previous body