Audit firm hails new rule, but calls to review non-audit fees

Muscat: An audit company on Tuesday welcomed the regulatory restriction in providing non-audit services to their clients. However, the firm has requested the authorities to reconsider restrictions on non-audit fees.
“The new regulation restricting the scope of activities that can be undertaken by statutory auditors to their listed clients is a welcome decision,” said Davis Kallukaran, managing partner of Crowe Horwath Oman. He said this would bring in more independence and transparency to the financial reporting.
However, Kallukaran noted that restricting the activities to three and restricting the fees from such activities to be not more than the 25 per cent of the audit fees is tricky.
“Auditors come across quite a lot of information and situations while carrying out the audits. It requires time and efforts of people with the right skills and experience outside the audit to analyse and report the information,” he said
While statutory audits are considered to be a routine affair, the other services of taxation, interim reporting and forensic audits is executed by partners and team with the right skills, knowledge and expertise gathered over so many years and it is costly.
“In my opinion, the fee restriction of 25 per cent of the audit fee is to be reconsidered,” noted Kallukaran.
The market regulator on Monday said that audit firms are now allowed to carry out three non-audit services — audit related services, taxation advisory services and investigation of matters arriving from auditor findings or observations — to their audit clients.
Across the globe, regulators are putting increased emphasis on the independence of auditors. Accordingly, the Capital Market Authority has reviewed a circular issued in 2009, which allowed 13 non-audit services for their clients.