The Auditing Practices Board (APB) will
tighten rules on the provision of non-audit services following a
consultation on auditor ethical standards.
In the responses to the board’s proposals on
ethical standards there was strong support to increase the
oversight of auditors providing non-audit services to their
clients.
However, the majority of respondents to the
consultation were against banning audit firms from providing such
services but did acknowledge there can be a perception of a loss of
independence where certain non-audit services are provided by the
auditor, especially when the ratio of non-audit fees to audit fees
is high.
There was overwhelming support for the APB’s
proposals to increase the rigour with which auditors assess
possible independence issues by launching a new non-audit services
disclosure regime and increasing the role of audit committees in
overseeing the retention of a company’s auditors to
undertake non-audit services.
“The changes introduced, taken as a whole,
represent a significant tightening of the requirements in relation
to the provision of non-audit services by auditors and introduce a
new approach designed to address investors’ perception
concerns through greater transparency,” APB chairman Richard Fleck
said.
