1 / 11

WHAT CAN THE AUDIT COMMITTEE DO BETTER? FEE ROUNDTABLE ON THE FUNCTIONING OF AUDIT COMMITTEES

This article discusses the role of audit committees and provides recommendations for improving their effectiveness, including mandatory tendering, transparent auditor selection process, caps on non-audit services, and improved reporting.

eloym
Download Presentation

WHAT CAN THE AUDIT COMMITTEE DO BETTER? FEE ROUNDTABLE ON THE FUNCTIONING OF AUDIT COMMITTEES

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. WHAT CAN THE AUDIT COMMITTEE DO BETTER? FEE ROUNDTABLE ON THE FUNCTIONING OF AUDIT COMMITTEES 5 of February 2013 Brussels Jella Benner-Heinacher

  2. About EuroFinuse • EuroFinuse - The European Federation of Financial Services Users was founded in 2009 under the previous name by several organizations: Euroshareholders (ESH), FAIDER, VEB and other financial services users’ organizations • EuroFinuse has a broader scope than ESH –all private investors: shareholders plus bond holders, fund investors, life insurance policy holders, bank savers, pension fund participants, etc. • Today represents 50 national associations and about 4 million European citizens • Main objective: to restore financial services • users confidence

  3. THE AUDIT COMMITTEE The shareholders‘ view: The board acts as the agent of all shareholders! The quality of the board members and the members of the audit committee (AC) is decisive Minimum one financial expert in the AC Give the AC a more responsible role in the audit process!

  4. THE AUDIT COMMITTEE • WHAT CAN THE AC DO BETTER? • INTRODUCE MANDATORY TENDERING IN REGULAR TERMSE.G. EVERY 15 YEARS • Itcanhelptohave a fresh pair ofeyes after such a longperiod

  5. THE AUDIT COMMITTEE • WHAT CAN THE AC DO BETTER? • IMPROVE THE AUDITOR SELECTION PROCESS AND ITS TRANSPARENCY: • Overseetheselectionprocess (equalaccesstoinformationfor all tenderingfirms) • Develop & implement a policy on theengagementoftheauditortosupply non auditservices

  6. THE AUDIT COMMITTEE • Set caps on the provision of non audit services • Approve the terms of engagement and the remuneration of the auditor • Develop the Recommendation to the board for the appointment of the auditor

  7. THE AUDIT COMMITTEE • AUDITORS‘ INDEPENDENCE IS A KEY ISSUE: • Develop an independencepolicytowardstheauditor: • Preapprovalofcertainservicesbytheauditor e.g. wherethreatstoindependenceareconsideredlow (auditrelatedservices) • Exclusionoftheauditorfromspecificservices • Eventuallylimitrelatedservicesto a fixedpercentageoftheauditfee

  8. THE AUDIT COMMITTEE • IMPROVE REPORTING OF THE AC TO THE BOARD: • Detailedandunderstandable • reportingnecessary • Describe in detailtheworkofthecommittee • Andalwayskeep in mind: • The AC cannottakeovertheresponsibility • ofthewholeboard

  9. THE AUDIT COMMITTEE • IMPROVE REPORTING TO THE SHAREHOLDERS IN THE ANNUAL REPORT: • Explaintheauditselectionprocessandthereasonsfortheappointmentofthisauditor • Explainthecompany‘spolicy on non auditservicesandthemonitoringprocess • Explainthefeespaidtoauditorforauditservices, auditrelatedservicesandeventually non-auditservices ( kindofservicesandreasonsforthisdecision)

  10. THE AUDIT COMMITTEE • BEST PRACTICE SIEMENS ANNUAL REPORT 2012: • „Siemens‘ AC hasestablished a policytoapprove all auditandpermissibleaudit-relatedservicesbytheauditor… • The company‘sindependentauditoris not allowedtoperformany non-auditserviceswhichmay impair theauditor‘sindependence… • Orwhichcanbemoreeffectivelyoreconomicallyprovidedbyanother…

  11. THE AUDIT COMMITTEE • BEST PRACTICE SIEMENS ANNUAL REPORT 2012: • „Furthermorethe AC has limited thesum total of all feesthatmaybeincurredduring a fiscalyearfor non-auditservices, includingaudit-relatedservices … to 30 % oftheauditfeesagreed upon fortherespectivefiscalyear.“ • (Page 217)

More Related