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November 7, 2010

Personal liability issue for PwC transparency campaign

PwC’s initiative to improve transparency of
the audit process is welcomed but consideration needs to be given
to the personal liability of audit committee chairs, according to
KPMG Audit Committee Institute head Tim Copnell.

“As a non-executive audit committee chairman
you have to start thinking am I taking on extra liability by
signing this report?” Copnell said.

He told the International Accounting
Bulletin
that a way to overcome the issue would be to make it
a board statement.

“I guess it would be one for the courts to
decide if something went wrong. I don’t think chairs would object
to the disclosure of the information, maybe just attaching their
own personal name to it.”

PwC UK audit partners are currently asking
audit committee chairs of its FTSE 100 clients to include more
narrative on the audit process, including conversations auditors
have about significant risks of misstatement.

According to Association of British Insurers
assistant director of capital markets Michael McKersie investors
will also be positive towards more informative governance reports,
although he raises the question on whether it should be up to
auditors or audit committees to disclose this.

“If [PwC] are getting a good reception from
directors, this might be quite productive,” McKersie added.

 

Related article


PwC auditors launch transparency campaign

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