EY creates independent audit board ahead of operational separation
EY has appointed two independent non-executive directors to its newly created UK Audit Board, ahead of plans to operationally separate its UK audit practice from its consultancy business.
Last summer the accounting watchdog asked the Big Four firms to separate their audit units from the rest of their business by 2024.
Auditors have come under increased regulatory scrutiny in recent years, with corporate failures at Carillion retailer BHS led to three government-backed reviews that recommended a shake-up of audit.
The FRC’s audit separation plan hopes to quash conflict of interest issues among the major players, so audits “do not rely on persistent cross subsidy from the rest of the firm”.
EY is the last of the Big Four firms to have created an independent audit board, which will oversee its UK audit practice and the application of principles set out by the Financial Reporting Council.
Mridul Hegde has been made a non-executive director on the board, having been an independent NED at HSBC UK and chair of its risk committee since 2018.
Philip Tew has also joined the board as a NED. He is currently a non-executive director and chair of the government, audit and risk committee for Quilter Cheviot, and is an ex-senior audit partner at PwC.
EY UK chair Hywel Ball said: “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.”