Deloitte UK today announces changes to its audit governance structure, with the establishment of an independent Audit Governance Board (AGB)*. Margaret, Baroness Ford of Cunninghame OBE, will be appointed as independent non-executive chair of the AGB when it is established, which will have a majority of independent non-executive directors, including Jim Coyle, Almira Delibegovic-Broome QC and Shirley Garrood, in addition to Baroness Ford.
Effective from 1 January 2021, the AGB will have responsibility for providing independent oversight of the UK audit practice, with a focus on the policies and procedures for improving audit quality and ensuring the Financial Reporting Council’s (FRC) objectives of, and desired outcomes for, operational separation are met.
The creation of the AGB is the initial phase of Deloitte UK’s implementation of the principles for operational separation set out by the FRC in July 2020.
Richard Houston, senior partner and chief executive of Deloitte UK, said: “We recognise the need to be more transparent about our audit business and demonstrate that audit quality remains our number one priority. Our governance changes are an important part of this, and we welcome the diverse and extensive experience and independent rigour these high calibre individuals will bring to the AGB and our audit business.
“The AGB is central to Deloitte UK’s new governance framework and a key step in the operational separation of our audit business from our wider firm. We continue liaising with the FRC on the best ways to implement further changes to our governance and reporting structures.”
Baroness Ford, incoming chair of Deloitte UK’s AGB, commented: “I am delighted to be joining Deloitte UK, one of the UK’s leading professional services firms, at what is a crucial time for the sector. It is clear that Deloitte UK recognises, and takes very seriously, its obligations around transparency, strong governance and the public interest, and I look forward to bringing my experience and insight to the firm.”
Stephen Griggs, current Deputy CEO and managing partner for audit & assurance and public policy at Deloitte UK, said: “We’ve been consistent in our support for audit reform, and remain committed to playing our role in delivering change that embraces audit quality, improves choice and restores trust.
“However, while governance changes to audit businesses are a key element of audit reform, they must also be considered alongside a wider package of change, including in areas such as corporate reporting, the role of directors, the evolution of the audit product and the regulatory environment in which we operate. Sweeping reform is needed if we are to better meet society’s needs and expectations of the audit profession in the years ahead.”
Alongside the establishment of the AGB and the independent non-executive appointments, Deloitte UK has also announced that Stephen Griggs will become managing partner for Deloitte UK.
Richard Houston added: “I am delighted to announce Stephen in this role, where he will be responsible for business performance, operations and public policy for Deloitte UK. We will work closely together as I remain the UK chief executive – with Stephen leading on all operational matters which, importantly, will include overseeing operational separation as part of audit market reforms. A successor for Stephen’s role as managing partner for audit & assurance will be in place by 1 October 2020.”
Finally, Deloitte UK will also establish a new Colleague Advisory Forum, in line with the Corporate Governance Code, to support engagement on governance. Made up of colleagues from a range of grades and parts of Deloitte UK, it will provide a more diverse perspective to the AGB and the firm’s UK Oversight Board (UKOB)*, to help inform decision-making.