London, Monday 05 July 2021 - Today, EY announces that it has appointed two Independent Non-Executives and established its new UK Audit Board, marking significant progress in the implementation of its plans for the operational separation of its UK audit practice.
Mridul Hegde and Philip Tew have been appointed as Independent Non-Executives and will sit on a newly created UK Audit Board, which came into effect on 1 July. The Audit Board is responsible for providing independent oversight of the UK audit practice, overseeing the application of the principles set out by the Financial Reporting Council (FRC)*. The Audit Board is to be chaired by David Thorburn, who is already an Independent Non-Executive for EY.
The new UK Audit Board supplements EY’s Public Interest Board (formerly known as the Independent Oversight Committee) which provides oversight of the management and supervision of the whole EY firm in the UK. The Public Interest Board will be chaired by Tonia Lovell, one of EY’s existing Independent Non-Executives, and will include David Thorburn and Sir Peter Westmacott (existing Independent Non-Executives) and Mridul Hegde.
As part of these governance changes, EY has also established an Audit Remuneration Committee which is responsible for overseeing the remuneration policy of the audit business.
About the Independent Non-Executives joining the Audit Board
The appointment of the new Independent Non-Executives and creation of EY’s new governance structure have been undertaken in consultation with the FRC.
Mridul Hegde CB has been an Independent Non-Executive Director of HSBC UK and Chair of its Risk Committee since 2018. She was also a Non-Executive Director of the UK Municipal Bonds Agency for three years. A former director of HM Treasury, Mridul was part of the leadership team that designed and executed the UK Government’s support of the banking sector during the global financial crisis. Prior to that, she was HM Treasury’s Director of Public Spending and held a number of other senior roles. Mridul brings significant experience of UK financial services and of the wider regulatory and governance ecosystem.
Philip Tew is currently a Non-Executive Director and Chair of the Governance, Audit and Risk Committee for Quilter Cheviot, a leading discretionary investment management firm. He was previously a senior audit Partner at PwC and worked for the firm for 40 years, before leaving in 2018. Philip has a wealth of experience in the financial services sector and brings strong technical knowledge of financial reporting, accounting and auditing. He has worked extensively with Boards, audit committees and management teams across large and listed companies. Philip will sit on the UK Audit Board only.
Building trust and confidence in UK audit
Hywel Ball, EY’s UK Chair commented: “Today’s announcement marks a significant milestone in the operational separation of our UK audit practice. The appointment of our new Independent Non-Executives and the creation of our UK Audit Board support our focus on delivering the highest levels of audit quality by building a culture of challenge and strengthening oversight. I am delighted to have appointed such experienced high calibre Non-Executives. Combined with our sustained investment in audit quality, we hope these measures will continue to build trust and confidence in UK audit.
“To be truly effective though, it’s important that operational separation is accompanied by changes in the wider corporate governance and audit ecosystem through the Government’s proposed package of reforms. The UK has led the world on accounting standards and corporate governance for over a century and these are key parts of the UK’s attractiveness as a place to do business. It’s vital the Government maintains momentum behind the consultation it launched in March in order to continue this legacy and ensure the UK remains competitive and attractive in this decade and beyond.”
David Thorburn, Chair of EY’s new UK Audit Board added: “Audit plays a vital role in the capital markets, providing trust, confidence and transparency to a broad set of stakeholders. The establishment of a UK Audit Board will support EY’s focus on these principles by providing independent oversight and challenge of the UK audit practice. I look forward to taking on the role of Chair at this significant moment for the audit profession.”
Notes to Editors
*The FRC’s principles aim to ensure that audit practices are focused on the delivery of high-quality audits in the public interest, and do not rely on persistent cross subsidy from the rest of the firm. Full details can be found here: https://www.frc.org.uk/news/february-2021/operational-separation-of-audit-practices
Further information about EY’s existing Independent Non-Executive Directors, Tonia Lovell, David Thorburn and Sir Peter Westmacott, can be found below: