UK - The UK's Local Authority Pension Fund Forum (LAPFF) has launched a campaign to pressure "laggard" companies to improve their audit practices.
The Forum, which comprises funds with a combined worth of £70bn (€106bn), will initially target the very few All-Share companies with no audit committee and those with committees whose structure "poses significant risks to the defence of shareholders' interests", notably because they lack non-executive directors.
The campaign will target shareholder voting and direct engagement with companies "with a focus on whether the company considered a mid-tier firm". The latter coincides with a broader campaign to lessen the perceived market clout of the "Big 4" auditors - PwC, KPMG, Ernst & Young and Deloitte.
PIRC spokesman Tom Powdrill questioned the independence of these auditors. "Basically, we don't like seeing companies earning more from their non-audit work than they do from auditing," he said. "It gives the wrong incentives."
The launch of LAPFF's campaign comes on the same day as leaked reports suggesting that the Financial Reporting Council has rejected a plan to make the Big 4 spin off their auditing businesses because of the potential impact on quality and cost.
"That would get rid of the conflict but it isn't the only way. There are other ways to manage it - but it needs managing," said Powdrill.
The LAPFF campaign will also oppose resolutions to cap auditors' liability in the wake of recent indications from the European Commission that limitless liability could reduce choice by bringing down any one of the four market leaders.
Chairman Darrell Pulk said in a statement: "There are some laggards in the market who simply need pulling up to minimum acceptable standards. But the broader aim of this investor campaign is to give companies a clear message of shareholder expectations on audit, and to begin embedding best practice on issues such as terms of engagement and auditor liability."