• Register
Return to: Home > News > Standards > Support for transparency initiative

Support for transparency initiative

Audit committee chairs appear open to providing more information in their governance reports in order to improve the transparency of the audit process, PwC UK senior audit partner Andrew Ratcliffe said.

PwC audit partners are now approaching the audit committee chairs of FTSE 100 clients to see if they would support an initiative to disclose more information in their reports.

"We had one client where we talked it through with them and their reaction was that it is a good idea and they would do it," Ratcliffe said.

"In fact, they are now drafting [the audit committee chair report] on that basis. It is probably still a work in progress, but I am not aware of anybody who said, ‘No, definitely not, over my dead body’."

PwC’s transparency campaign encourages audit committee chairs to disclose auditor conversations, such as significant risks of misstatements.

An audit committee governance report, which sits in a company’s annual report, is thought to be the best vehicle to disclose additional information on audit due to the freedom committee chairs have over their narrative.

Changing the format of a formulaic audit report, which is governed by standards, would be a lengthy process that involves changing the law.

The success of the campaign will hinge on ensuring the new style of report is concise, easy to understand and does not add excessive pages or complexity to annual reports; PwC’s mock-up of a new governance report is about one-and-a-half A4 pages in length.

Ratcliffe said a future step towards improving transparency is to provide more meaningful assurance over narrative reports. At present, auditors are only required to read narrative reports and flag something that is inconsistent with the financial statements or factually incorrect.

"It is a limited brief and it’s a negative assurance," Ratcliffe said.

"Maybe we should talk about the narrative statements being a fair presentation or a faithful narrative of something that gives a higher level of assurance than this convoluted negative thing we have at the moment."

Top Content

    South Africa: sensing new opportunities

    It has been an interesting couple of years for the profession in South Africa. A number of high-profile scandals have brought the profession and the role of auditors into sharp public focus, brewing a distrust towards accountants and a large expectations gap. Joe Pickard reports.

    read more

    Ghana: a quest for consistency

    Ghana’s current economic profile would suggest a fertile landscape for purveyors of accounting services. But inconsistent approaches to compliance and application of standards – coupled with problems in the banking sector and consequent liquidity constraints – have created a challenging environment. Paul Golden writes.

    read more

    Drone technology: audit takes to the skies

    The movement towards a digitised era has already impacted the auditing profession in a number of ways, from blockchain to artificial intelligence. Now firms are taking to sky and using drone technology in their audits. Mishelle Thurai speaks to Big Four firms to find out more.

    read more

    SBC: a new alliance joins the market

    Jonathan Minter speaks to Paul Tutin, chair of founding firm Streets Chartered Accountants, about why the business and its European partners took the decision to launch their own association.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.