28 Sep 2019 PwC considers handing to external body oversight of auditors’ pay
https://www.wsj.com/articles/pwc-considers-changes-to-u-k-auditor-pay-to-avoid-conflicts-of-interest-11569609468Karthik Ramanna, a professor of business and public policy at the University of Oxford’s Blavatnik School of Government, in a report commissioned by PwC in June 2019, called for audit firms to resort to independent, external remuneration committees to advise on audit partners’ pay.
He also also suggested for audit firms’ boards to test internal controls and for junior-level staff to receive more hands-on training. All of this would then lead to the most needed changes that would affect the whole industry, including an operational and even a structural split of companies’ audit and non-audit businesses.
“The public’s disillusionment with auditing will continue until the firms can
credibly demonstrate that they are managing conflicts of interests,” Mr. Ramanna wrote in his report. “This requires both an organizational architecture that is more open to external scrutiny and the firms being more open to take substantive actions when the scrutiny so suggests,” he said.
Consulting tends better paid than audit work, in a way that an auditor may not be motivated to properly challenge a client’s management knowing of loosing the advisory work. Atul Shah, an accounting professor at City University, commented on the report, saying: “PwC have commissioned this report to show that it is self-regulating. The history of British audit regulation is littered with self-regulation and this needs to change radically.”
For more information, read the FT article on the following link:
https://www.thetimes.co.uk/article/pwc-may-hand-power-over-pay-to-outside-body-t65kgdq2p
https://www.ft.com/content/d0c2c5f0-e07b-11e9-9743-db5a370481bc