Audit Committee Network update

Spring 2018 summary

Overview

We believe it is important for audit committees to have access to insights and support on the important and emerging issues on the audit committee agenda and therefore PwC's programme for FTSE 350 (and equivalent) audit committee chairs and members offers a series of workshops featuring topics relevant to audit committees.

We have produced a summary based on current hot topic areas which were featured at our most recent Audit Committee Network workshops.

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Accounting update

IFRS 16 is effective 1 January 2019 and requires lessees to recognise nearly all leases on the balance sheet, which will reflect their right to use an asset for a period of time and the associated liability for payments. The practical application of this and applying it to the specific circumstances around your business can be challenging. Our accounting update featured the implications for audit committees and the questions to be asking management.

EU regulation requires listed groups to report on accordance with IFRS as endorsed for use within the EU. But what happens when the UK leaves the EU in March 2019? We surveyed our attendees to discern their opinions.

Corporate reporting/governance matters

On 5 December 2017, the Financial Reporting Council (“FRC”) released its proposals for revisions to the UK Corporate Governance Code (“Code”) and Revised Guidance on Board Effectiveness for consultation. This is part of wider framework requirements and proposals connected with the 2016 Corporate Governance Reform Green Paper. In this update, we covered a number of proposals affecting audit committees including:

  • Non-Executive Director and chair independence
  • Reporting
  • Workforce engagement
  • Responding to a significant vote against a resolution

Total Impact of Internal Audit (TIIA)

How can Internal Audit demonstrate the value it adds? To help Internal Audit functions direct and measure the contribution of Internal Audit within an organisation and its impact is measured by effectiveness and contribution. The challenge is demonstrating the value Internal Audit provides rather than just assurance, because traditionally Internal Audit is measured by inputs and outputs. Conflicting stakeholder expectations also add to the burden.

Total Impact of Internal Audit (TIIA) helps articulate and measure the contribution an Internal Audit function makes. With the audit committee being a key stakeholder, this framework helps get the best out of an Internal Audit function.

Tax transparency and the rise of digital tax authorities

Tax is undergoing a huge international change as a result of the OECD Base Erosion and Profit Shifting (BEPS) project and has become the focus of many stakeholders, leading to increased pressure for greater transparency of responsible tax management. This means the expectations on the tax department are increasing and they’re having to respond to greater transparency demands and reputational concerns.

At the same time, tax authorities are becoming more sophisticated as they have significantly more data available and technology is increasing at a pace that they are now able to use data to assist the way they risk assess companies and conduct audits. What should audit committees be doing to respond to this challenge?

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Audit Committee Network update
Spring 2018 summary
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Contact us

Andy Kemp
Chairman, FTSE 350 Non-Executive Director Programme, PwC United Kingdom
Email

Keely Andrews
Manager, Audit Committee Network
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