For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.
Administration April 4, 2001
Proxy Advisor Softens Accounting Stance
April 4, 2001 (PLANSPONSOR.com) - Proxy advisory
firm Proxy Monitor has softened its position against
shareholder ratification of auditors who bill
"disproportionate" fees for non-audit work to companies they
audit.
Reported by editors@plansponsor.com
Proxy Monitor now says it will take into account “audit-related” work, which could include regulatory and employee benefit plan financial statement audits, even though technically outside the SEC’s definition of disproportionate fees.
The SEC standard focuses on fees not related to the audit of the firm, that comprise more than 75% of the total fees collected from that client, according to the Wall Street Journal.
Making the Case
The move follows an apparently persuasive argument from Mellon Financial. After taking into account “employee benefit plan financial statement audits” and “compliance attestation services”, Mellon didn’t reach Proxy Monitor’s 75% threshold.
Proxy Monitor also is giving a retroactive “pass” to auditors that exceeded a prior, lower 50% threshold, if payments are still below the 75% level.
The firm says it is not changing its stance, but will allow companies to establish that fees are clearly audit-related in nature, even if not directly associated with the audit of the firm’s financial reports.
Proxy Monitor had recommended voting against auditors at 84 of the 652 companies up for a shareholder ratification vote this year. The firm currently advises about 300 clients on such matters.
– Nevin Adams editors@plansponsor.com