Insight interview - Smith's not so scary.

(From Financial Director)

Byline: Peter Williams.

The country's leading finance directors seem largely in favour, or unmoved, by the guidance penned by a working party chaired by Sir Robert Smith. In an interview with Financial Director magazine, Smith says that, to date, the biggest concern seems to be the need for a financial expert on the audit committee. "We never mention the word 'expert', but we do ask for 'recent and relevant experience', which is not too revolutionary to ask for," he says.

Rather than always looking for an experienced and qualified accountant to join the audit committee, Smith has in mind characters who are independent and tough-minded, and won't be pushed over. "You need people who can say, 'This major improvement in profit has come about as a result of an accounting policy that seems kind of racy.' They don't necessarily need to be qualified accountants," he says.

As for the power to seek their own accountancy advice and the right to pen separate sections in the annual report, Smith sees those as, in essence, reserved powers that will only be used in extremis when there has been an irretrievable breakdown of the board. But he does not shy away from the fact that guidance will make a difference to the work of the FD.

From Smith's perspective, the key element that is changing for the FD is the relationship with the external auditor. If you are an FD who has been accustomed to running the external auditor, then life is going to change. From now on, that's one of the roles of the Audit Committee. And for Smith there is no doubt over the efficacy of the change. He says: "The external auditor is checking up on the work of the FD. So how can you have the person who you are checking deciding whether you are hired or fired, or how much you are going to get paid?"

For anyone who remains unconvinced that non-execs should have such a role, Smith draws a parallel with Cadbury Schweppes that enshrines the notions of non-executives. Critics of Cadbury Schweppes suggest that non-execs could not be so closely involved in running a company, a view seldom heard these days.