Responding to the publication of the Brydon Review, Roger Barker, Head of Corporate Governance at the Institute of Directors, said:
“The broad thrust of the Brydon Review report is on the money, tackling some of the underlying issues that have undermined trust in the auditing sector. As things stand, four in ten of our members have expressed doubts about the effectiveness of statutory audit in providing meaningful assurance that the accounts of major companies are fair and accurate.
“We welcome the proposed widening of the scope of audit to encompass disclosures beyond the financial statements. Company reporting on issues such as governance, environmental risks and social impact are increasingly important to shareholders and other stakeholders. External auditors can help rebuild trust in business by offering independent assurance on the robustness of these statements. Meanwhile, the amount of dividends paid to shareholders has been a controversial issue in several recent corporate collapses. We are therefore supportive of the Review’s recommendation for auditors to oversee the justification of these pay-outs.
“The Review contains some interesting innovations, such as a new requirement for directors to publish a Public Interest Statement. This may offer companies a useful vehicle to affirm their corporate purpose beyond the generation of financial returns. However, the interaction of this statement with other similar disclosures – such as the recently introduced section 172 reporting – will need to be clarified in order to avoid confusion.”