The audit committee is a central pillar of effective corporate governance and is in the best position to offer effective oversight of the performance, independence and objectivity of the auditor and the quality of the audit. The audit committee’s role is also something we believe can be built upon.
But unlike some proposals now being considered that would enforce mandatory auditor changes, we propose the introduction of a periodic comprehensive review of auditor performance and quality of the audit by the audit committee.
Such a review, if undertaken at least every five years, would allow the audit committee to:
We believe periodic review is a more appropriate and effective approach than measures such as mandatory change – which we believe would undermine the audit committee’s role by limiting its freedom to decide which audit firm best meets the company’s and shareholders’ needs – which, in turn – would restrict the committee’s ability to offer good governance.
In this Point of View, we take a deeper look at the benefits of a periodic review and how it should be considered as part of a wider ‘package’ of changes that we have proposed in previous PoV papers, including:
Read our latest PoV for more information on the role of the audit committee.
Global Assurance Leader, PwC United Kingdom
Tel: +44 (0)20 7213 5501