 |
Richard Fleck |
The UK's Auditing Practices Board (APB) is updating its ethical standards for auditors to ensure these are consistent with changes in the law arising from the European Union's Statutory Audit Directive, as well as reflecting changes in accepted practice. The APB will issue a draft this autumn and to complete the revision in time for the implementation of the above directive in April 2008.
As part of its review the APB published a summary of this work on Monday. The study involved a survey of company directors and an analysis of information relating to audit fees and fees for non-audit services published in the accounts of listed companies. The survey shows that audit fees at FTSE 100 companies remained much the same from 2005 to 2006, whereas audit fees at second tier FTSE 250 companies actually fell by 12%. This is in marked contrast to US experiences post- Sarbanes-Oxley. Non-audit fees at those companies surveyed also fell.
Richard Fleck, Chairman of APB and worldwide practice partner at lawyers, Herbert Smith, commented "The independent setting of ethical standards for auditors represented a major step in the re-establishment of confidence in financial reporting following from the post-Enron review of auditing and accounting issues. We believe that the standards APB issued in 2004 have been effective and will not need major revision. That said it is appropriate to periodically review them in the light of developments and this research, combined with other studies undertaken recently, provides us with valuable insights into current views and practices."
The APB research is focussed on the corporate experience. The APB has been assisted by the Committee on Corporate Governance, whose members are drawn from the Financial Reporting Council (FRC), the independent UK regulator for corporate reporting and governance, and the parent body of the APB.
In other news, late on Tuesday, CEIPOS published the official Level 1 Solvency II Framework Directive. Thomas Steffen, CEIOPS Chair said “Solvency II will set a benchmark for financial services supervision which includes banking …. [it] is not just about capital. It is a change in behaviour - for the sake of enhanced consumer protection, financial stability and efficiency of insurance markets”.
| 
