RSA caps auditor fees from consultancy services

RSA Insurance Group (RSA) has said that it will limit the amount of fees its auditor can earn from providing consultancy work to the insurance company.

KPMG will be able to make a maximum of 25% of its total audit fee from non-audit services such as advice on tax, strategy and IT, RSA said in its annual report.

The change is similar to a proposed reform of audit rules by the European Commission – including a cap of 70% on fees for non-audit services and banning some.

The reforms, which have been opposed by the big accountancy firms, are intended to reduce conflicts of interest between auditors and their clients.

KPMG, which last year replaced Deloitte as auditor of the struggling insurer, made £...

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Comments

Auditors' non audit fees

Duncan Alexander | | Permalink

As a long term shareholder in RSA Insurance Group, I welcome the news that there will be a limit to non audit fees for the auditor. In my view the owners should be looking to make smaller these fees, as these payments reduce the credibility of the independent audit function.

It would also be helpful if auditors were required to regularly confirm that as shareholders formally appoint them, they should acknowledge their duty of care to owners and other stakeholders who may rely on the quality of their work for making their own business decisions.

In view of the many recent financial scandals, it would also be useful for auditors to confirm that the detection of fraud is one of their primary functions.

Are these unreasonable expectations for investors?

 

 

Since When?

redboam | | Permalink

The use of the expression "it will" means that this cap has not been the case before now despite presumably being seen as desirable; so the question arises; exactly who has been getting away with what in the past and for how long?

Auditors' non audit fees

Duncan Alexander | | Permalink

Thanks for the Since When? feedback. I have just emailed the following to the Chairman:-

As a shareholder in RSA Insurance Group, I understand from an AccountingWeb article: RSA caps auditor fees from consulting services, that RSA may have been paying our auditors for consultancy services. If this is the case, could you give me the figures for the say the last 3 years on our audit fee and non-audit fees to our auditors? If you have time, could you reply to the expectations of this investor in his comments to this article?

I'll copy his reply on to this thread.