UKSA-ShareSoc submitted a joint response to the Brydon REVIEW INTO THE QUALITY AND EFFECTIVENESS OF AUDIT
We said a fresh approach was needed.
Many of the questions in the Review overtly or implicitly prompt debate about how the external audit can be made more robust and more relevant in future. Underlying this is a requirement to find ways of making auditors more accountable to those they are meant to be serving – namely the shareholders. Our view is that this cannot be achieved by adding more layers of narrative and written information in the annual report.
Action to improve auditor accountability to shareholders has to focus on providing direct face to face contact between the auditors and those they are supposed to serve. This allows appropriate interaction in the form of dialogue and questioning. Importantly, it avoids the scope for well- intended expansion of audit reports and comment using the written word to degenerate into compliance-oriented boiler-plate and obfuscation.
Our proposals for at least one semi-formal meeting each year between the auditors and shareholders are summarised in our response to Question 7 (para7.2) below. We believe that at these meetings the members of the audit committee and senior personnel from the internal audit team should also be present and accountable. The AGM remains an appropriate place for the executive directors to be held accountable to shareholders on wide-ranging topics such as strategy, staffing and business development. It is not normally the place, however, for detailed discussion about the audit or the thinking and justification behind the presentation of the financial statements.
Our detailed responses to the 60 questions in the consultation can be found here BEIS-Brydon-Review-Final
The terms of reference for the consultation are here https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/794244/brydon-review-call-for-views.pdf
Cliff Weight, Director, ShareSoc, 4 June 2019