Case 9 — Ostrich plc
13.1 BACKGROUND TO THE CASE
Ostrich plc is a small manufacturing group which has grown by the acquisition of smaller companies in the same sector. The finance director, Matthew, and the audit committee chair, Victor, are qualified accountants. The audit engagement partner, Luke, has been involved with the client for a couple of years. All three were interviewed for this project but decided that they did not want a detailed case to be published. We have therefore provided a broad overview of the case to underpin the analysis of the interactions.
13.2 CORPORATE GOVERNANCE
A number of executive directors attended audit committee meetings including the CEO, who takes a keen interest in financial reporting. Victor considered this was necessary for the audit committee to gain a better understanding of the operational issues. There were at least three audit committee meetings per year dealing with audit planning, interim results, final results and other issues. The audit committee engaged with the audit planning process. The audit fee was primarily negotiated between Matthew and Luke, with some input from the other members of the board. The audit committee then approves the audit fee. Matthew believed that the main focus of the audit committee was on the audit although Victor was concerned that broader issues (e.g. risk assessment) should be given adequate consideration.
Victor expected all accounting issues to be resolved between the finance director and the ...