British firms rapped over virtually identical responses to consultations over reforms to way they are governed
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Tuesday 02 July 2013
Shareholder voting advisor Pirc has attacked British companies for producing virtually identical responses to consultations on a series of crucial reforms to the way they are governed.
The organisation, which advises some of Britain's biggest companies on how to vote at annual meetings, has investigated a series of responses to the Competition Commission's consultation on reforming audit.
All use the stock phrase "costly and disruptive" to describe a move to force them to change auditors every 15 years.
And, it says, many paragraphs in responses to the consultation are virtually identical save for a few small changes.
Pirc has criticised the practice, known as "Astroturfing", which it says provides "little insight into their companies' particular circumstances" or why a reform might really be detrimental to a business.
It also takes a sideswipe at business for accusing governance advisors of using a "tick box" approach when generic responses to consutlations amount to much the same thing.
Highlighted in its "Alerts" circular, are similar paragraphs from GlaxoSmithKline, the drugs company, and SABMiller, the brewer. The former says: "If having conducted a formal tender process it happens to be the incumbent auditor who can deliver the best audit, it makes no sense to appoint an alternative, especially given the length of time and resources required in the early years following a new appointment."
The latter says: "If the outcome of a tender process confirms that the incumbent auditor is best qualified for the role, it makes no sense to appoint a second best alternative given the length of time and resources required in the early years following a new appointment."
The Competition Commission is investigating company auditing in the wake of a referral by the Office of Fair Trading. Currently just four firms: Ernst & Young, KPMG, PricewaterhouseCoopers and Deloitte audit the accounts for 95 per cent of the FTSE 100.
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