UK: Audit Committees: Smith Guidance: Proposed Changes

The FRC has issued a consultation paper which proposes changes to the Combined Code and Smith Guidance on Audit Committees. The recommendations include:

(a) Company boards to provide information to shareholders relevant to their auditor selection decision.
(b) Company boards to disclose any contractual obligations (such as loan agreements) to appoint certain types of audit firms.
(c) Large companies to consider the need to include the risk of the withdrawal of their auditor from the market in their risk evaluation and planning.
(d) Sections of the Smith Guidance dealing with auditor independence to be reviewed for consistency with the relevant ethical standards for auditors.

The FRC's press release is available here.

Some useful background information on the role of audit committees can be found in a guide published by Deloitte titled "Catch the Current".