The Financial Reporting Council (FRC) has opened a consultation on new rules that would compel auditors to write a “commentary” flagging problems, risks, or disagreements with management at audited companies. Chairman of the FRC’s audit and assurance council, Nick Land, said: “It has been a waste of time to read 99 out of 100 audit reports. Although shareholders got a set of accounts that were true and fair there was no point in reading any of it.” Mr Land admitted that the new rules could make life more difficult for management teams, but suggested he had little sympathy for them, pointing out that an auditor’s primary responsibility was to a company’s shareholders. “It will also act as a hook for investors to ask questions if they want to. Without this, shareholders don’t have an idea where to start,” he said. The consultation will be open until the end of April.
The Daily Telegraph, Business, Page: 1