Research commissioned by the UK’s Financial Reporting Council (FRC) and conducted by YouGov, has found that the development of standards for audit committees would support a more consistent approach to promoting audit quality. The research involved interviews with Audit Committee Chairs (ACCs) on how they carry out their role.
The research found that ACCs placed great emphasis on the audit tendering process in order to ensure a high-quality audit and on challenging their auditor on how their audit approach would deliver quality.
However, challenge was less apparent in relation to auditors’ judgements and findings. Few ACCs mentioned regularly challenging company management as well as their auditors during the audit process.
FRC executive director of regulatory standards Mark Babington said: “Audit committee chairs and audit committees have a vital role to play in ensuring high-quality audits are conducted in the public interest. Today’s research reveals there is a lack of consistency in how to approach audit quality with insufficient focus on challenge of management and professional scepticism.
“Delivering high standards of audit, corporate governance and reporting remains a key focus for the FRC and we are working closely with the Government to take forward proposals that will better meet the needs of stakeholders and users of accounts.”