Directors review of Financial Accounts and External Auditor

Today, the AFR, the Chairman of ASIC, Mr Rod Medcraft made the following comments :

“Mr Medcraft put the onus on directors to contribute to audit quality by ensuring auditors receive reasonable fees and that auditor independence is protected. Price gouging is rampant in the industry, surpassing 2008 levels in the wake of the financial crisis.

(see http://www.afr.com/p/national/boards_must_drill_auditors_asic_8BSbDG724pNPUda4WWbysL – subscription required).

It is important that Directors (often through their Board Audit and Risk Subcommittee) have an active engagement in the tender for External Audit Services, approval of the annual Engagement Letter, review the financial accounts with the External Auditor and finally review their performance.

To assist directors with these processes, we have provided some documents that have been based on various books and material available, please click here to be taken to the page.

An effective external audit process required good and effective oversight by the Directors often through an engaged and active Board Audit (and Risk) Committee.

 

Backward Guide on Best Practice for Australian Commonwealth Public Sector Audit Committees

Australian National Audit Office – Public Sector Audit Committees – Independent Assurance and Advice for Chief Executives and Boards – August 2011 – Best Practice Guide.

On 31 August 2011 the Australian National Audit Office (the office of the Australian Commonwealth Auditor-General) released its latest best practice guide for Audit Committees in the Commonwealth Public Sector.

Given the advancement in other public sector jurisdictions in Australia, and significant improvements in the private sector, this is an exceptionally disappointing body of work and may not lead to the improvement in governance in the Australian Commonwealth Public Sector. I am disappointed that the Commonwealth Auditor-General has not provided effective leadership in the Commonwealth in this area. Continue reading