Audit committee chairs must push for more audit materiality information; auditors must be more transparent; and investors must understand the process better, says the Financial Reporting Council.
A "communication gap" between audit committee chairs and auditors over the level of materiality applied during an audit is occurring in a significant number of companies, according to a thematic review by the Financial Reporting Council (FRC).
The accounting watchdog’s latest review of how audit materiality is undertaken and communicated to the board and stakeholders shows that one in six (17%) of audit committee chairs neither discussed nor challenged the level of materiality that had been set. A further 8% did not have materiality levels shared with them by the auditors.
“Given the enhanced requirements for audit committees to mon
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