Our global response to the Audit Firm Governance Code
In January 2010, the UK Financial Reporting Council and The Institute of Chartered Accountants in England and Wales issued a Governance Code for audit firms. The purpose of the Code is to promote confidence and choice in the UK audit market and to provide a benchmark of good governance practice. The Code takes effect for our fiscal year beginning 1 July 2010.
At EY, we see the publication of the Code as a real opportunity. Over the past few years, we have moved aggressively to integrate our organisation and strengthen our ability to provide seamless, consistent, high quality service worldwide. For us, much of our ability to do this depends on strong governance and tone at the top. We have to be looking at risks broadly, serving the right clients, making the right investments, and sending talent where it is most needed. This is how we strengthen audit quality.
So, although the Code technically applies only to our UK business, as a globally integrated organisation we believe it is most appropriate to implement the Code’s provisions on a global basis. This includes one of the important provisions of the Code – the requirement to appoint independent non-executives (INEs). It is anticipated four INEs will join the Global Advisory Council (GAC) of EYG in the near future. The GAC oversees global strategies, business plans, important appointments and the public interest aspects of our decision making.
Including individuals from outside EY on the GAC will bring to the senior leadership of the global organisation the benefit of significant outside perspectives and views, and is consistent with our public interest obligations. It is expected these leaders will have globally diverse backgrounds in regulation, business, public service or academia, and will bring a wealth of experiences and important considerations to EY.
The Transparency Report 2010 for Ernst & Young LLP United Kingdom, which will be issued in September, will include all disclosures required by the Code.