Additional officers that should be included are the Director of Internal Audit or any member of Internal Audit hired by the company who would be assisting with the financial audit of the company and who was a member of the engagement team when they were employed by the external auditors.
Our audit committee has implemented a procedure for the Director of Internal Audit to review all non-audit services (including tax work) provided by the external auditors for violations of independence. The entire audit committee also must approved all fees for non-audit services over a certain threshold.
Public accounting firms provide a large array of services to their clients that are deemed as non-audit or consulting services. Further restrictions on the type of services should be provided; management consulting and business process improvement (where the enagement team reviews certain aspects of the companies business) engagements may or may not include members of the audit engagement team. This may allow audit teams to exploit known weaknesses in the client's internal control structure. In addition, in these types of engagements, the engagement team is responsible for recommending improvements which could involve a change in the control structure. Under the premise of 'auditing their own work', external auditors would in effect be auditing the changes that they themselves had suggested in the control structure. In order to make the rule clear (and so that loopholes cannot be devised....), limit the external auditors to tax, audit and review services only. Consulting and other special project work can be done by other firms or outside consulting.
Financial Systems Implementation:
All aspects of system design, selection, implementation, testing should be banned from the external auditors, not just financial systems. Under the same thought process as consulting services, other systems feed into the financials and can have a financial impact on the company. Ultimately, any system implemented will have a financial effect on the company and also carries with it some aspect of control implementation (either manual or automated). Lisa Gunther, January 21, 2003
This message originates from WMS Gaming Inc. It contains information which may be confidential or privileged and is intended only for the individual or entity named above. It is prohibited for anyone else to disclose, copy, distribute or use the contents of this message. All personal messages express views solely of the sender, which are not to be attributed to WMS Gaming Inc., and may not be copied or distributed without this disclaimer. If you received this message in error, please notify us immediately at (847) 785-3000.