The UK Auditing Practices Board
(APB) has proposed amended ethics standards designed to increase
transparency around audit firms’ provision of non-audit services to
audit clients but has stopped short of introducing new
The APB launched a consultation on
the provision of non-audit services by audit firms to their audit
clients in October 2009, following a Treasury Select Committee
proposal that auditors should be prohibited from providing these
There was an overwhelming view from
the 150 respondents that there should not be outright prohibition
or any major change to the conceptual approach taken by the
The current ethical standards and
corporate governance regime were seen as sufficient by these
Just three commentators (an
investor, academic and politician) argued that audit quality is
compromised when the auditor carries out any non-audit
A number of investor respondents
argued there should be greater disclosure about the nature and
level of non-audit services provided by auditors.
Corporate respondents also said
there was scope for better disclosure of the type of work being
undertaken by an auditor and how companies ensure auditor
independence is maintained.
The APB’s proposed changes to its
ethics standards have, therefore, mainly related to improving
transparency and the reporting of information about such
Most other proposed amendments aim
to clarify the existing rules.
In line with the APB proposals, the
UK Financial Reporting Council (FRC) proposed to enhance its
guidance for audit committees to encourage them to consider fees
incurred for non-audit services relative to the audit fee.
The FRC proposed audit committees
should also provide explanations of their policy on the provision
of non-audit services by the auditor and why it was thought
appropriate that specific services should be provided.
The deadline for both the APB and
FRC proposals is 23 October.
The APB plans that any changes to
its ethical standards will apply to audits of financial statements
for periods commencing on or after 15 December.
Of the 150 respondents to the APB consultation, 109 were from
the corporate sector, 24 from the accountancy profession, nine were
institutional investors and there were eight others.