The majority of audit committee reports fall
short of best practice, according to a joint study by BDO UK and
the Institute of Chartered Accountants in England and Wales

The report analysed the work of audit
committees across 237 listed companies and found that just a third
of audit committee reports include details about the effectiveness
of external auditors and how this has been assessed.

According to the survey, few audit committee
reports manage to make effective disclosure on the extent of
threats to independence and objectivity of external auditors and
that ‘boiler-plating’ is evident in this area.

Audit and the non-audit services policies were
said to often be poorly described and only three out of seven
reports refer to the provision of non-audit services by

“Inconsistent quality and boiler-plating does
nothing to reassure investors and our research highlights the
significant divide between what is expected of audit committees and
where many actually are now,” BDO senior audit partner James Robert

ICAEW Head of Corporate Governance Vanessa
Jones stressed that in spite of some great examples of audit
committee reporting “many audit committees do not maximise the
potential to ‘tell the story’ of the work that they undertake
throughout the year and this is a real missed opportunity”.

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The report also found very few companies
provided any information on tendering frequency, the tenure of the
incumbent auditor, and any contractual obligations that acted to
restrict the audit committee’s choice of external auditor.

The average number of audit committee meetings
was three per year, according to the institute’s research.