Survey Report

This Survey Report contains the results of AFRC’s online survey on the practical realities facing auditors and audit committees in relation to auditor appointments and audit fee setting. The Survey was conducted in November and December 2022 and in total AFRC received responses from 165 listed companies and 63 Public Interest Entity auditors (PIE auditors).

Key findings of the Survey include:

1. In terms of the implementation of the Guidelines for Effective Audit Committees – Selection, Appointment and Reappointment of Auditors, the picture is mixed. While 97% of listed company respondents agreed that they play a key role in enhancing and maintaining audit quality, only one Category A PIE auditor¹ (17%) believed that the audit committees they work with have implemented the Guidelines effectively. This suggests there is significant room for improvement.
2. Despite AFRC’s efforts in promoting audit quality during auditor selection, listed companies still rank proposed audit fees as one of the top three factors.
3. Audit teams experienced frequent pressure to reduce fees and to issue a clean audit opinion. Almost half of the Category A and C auditors experienced some fee pressure on a periodic basis as opposed to only 16% of Category B auditors. Auditors across all categories experienced pressure to issue a clean audit opinion, with half of Category A firms reported experiencing such pressures.
4. Quality of listed company disclosures leaves a lot to be desired: in three out of the four disclosure areas², more than half of the auditor respondents believed that disclosures by listed companies were not satisfactory.

¹ Category A PIE auditors are auditors with more than 100 PIE audit engagements; Category B PIE auditors are auditors with 10 to 100 PIE audit engagements; and Category C auditors have one to nine PIE audit engagements.

² The four disclosure areas: (i) Auditor selection process (ii) Auditor selection criteria and basis for decision (iii) Explanation of how the audit committee has assessed the effectiveness of the auditor (iv) Reasons for a change in auditor.