IOSCO hinges investors’ confidence on quality audit report

…Shareholders task firms on training for audit committees
The Board of the International Organisation of Securities Commissions (IOSCO), has described the quality of a company’s financial report, supported by an independent external audit, as key to enhancing investors’ confidence and promoting effective functioning of capital markets.

In its report on, ‘Good Practices for Audit Committees in Supporting Audit Quality, which seeks to assist audit committees in promoting and supporting quality auditing, IOSCO maintained this is the committee’s primary responsibility, thereby contributing to greater confidence in the quality of information contained in listed company’s financial reports.

According to organisation, good reports would assist audit committees in considering ways in which they may be able to promote and support audit quality.

IOSCO said the report provides good practices that audit committees may consider when recommending the appointment of an auditor; assessing potential and continuing auditors; setting audit fees.

It would also facilitate the audit process; assessing auditor independence; communicating with the auditor; and assessing audit quality.

The report sets out good practices regarding the features that an audit committee should have to be more effective in its role, including matters such as the qualifications and experience of audit committee members.The development comes as Nigerian retail shareholders have stressed the need for listed firms to train audit committee members, to enable them acquire more knowledge that would sustain their oversight functions.

Specifically, the Founder of Independence Shareholders Association of Nigeria, Sir Sunny Nwosu, said it is in the interest of good corporate governance that listed firms trained their audit committee members, and expose them to best practices.

Increasingly, he said key stakeholders including regulators, councillors, and management, who provide valuable independent assurance and advice in many areas including risk management, compliance, internal control, fraud control, internal audit, external audit and other governance functions, rely on audit committees for information.

According to him, this provides a better understanding of relationships between management, governance, risk management and internal audit.“Corporate governance requires that listed firms expose their audit committee members to acquire basic training. Some good companies send them to training, but it could amount to wastage if they did not stay for a long time, so that these companies can benefit from the training because audit committee members must subject themselves for election every year.”

An independent investor, Amaechi Egbo, said: “The audit committee members should be empowered. They should be trained to acquire more knowledge so that they would improve on their oversight functions.”