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Reaching Key Financial Reporting Decisions: How Directors and Auditors Interact by Tony Hines, Vivien Beattie, Stella Fearnley

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6

Case 2 — Kestrel plc

So you know when you are dealing with the auditors that not only are they trying to obviously do the job they are required to do on your audit, but they are also making sure that they cross all the t's and dot all the i's for when they get that inspection (Philip, finance director)

6.1 BACKGROUND TO THE CASE

Kestrel plc is a manufacturing group which has a number of overseas subsidiaries. Recent results have been adversely affected by the recession allied with the higher raw material and energy prices. Because of the nature of the group's activities there is considerable disposal and acquisition activity.

The Kestrel Group is not tightly controlled centrally and individual subsidiaries have freedom to set their own procedures.

The finance director is Philip (aged in his 50s), a qualified accountant with experience in a large firm of accountants. He also served as a director in other multinational companies before joining the board of Kestrel. The audit committee chair is Guy (also in his 50s) is a qualified accountant who holds a number of other non-executive directorships and has recent experience of serving as chairman for a PLC. Previously he has acted as finance director for a major company and has also worked in public practice. He joined the board of Kestrel relatively recently. Barry (in his 40s), the audit partner, is a senior audit partner in a Big Four Firm.

6.2 CORPORATE GOVERNANCE

The board of Kestrel has more non-executive directors than directors. ...

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