Rule change 'won't reduce audit barriers'

Members of the European Commission have been told that changing the rules on who controls audit firms is 'not enough' to reduce barriers for entry into the audit market. Calls to lessen systemic risk surrounding audit market concentration have been ongoing by departing chief executive of the Financial Reporting Council Paul Boyle, who has pushed for audit choice to be deferred outside of the Big Four, making recommendations for change through the FRC's Market Participants Group - the last report of which was published in May and expected recommendations to be implemented in the next six months. The EC issued a public consultation in November last year, which has now revealed that 90% of respondents believe it should be striving to reduce barriers to entry. Of the respondents- which included accountancy firms, institutes and accounting and business associations- some voiced the opinion that allowing external investment in audit firms could help. But the majority felt that lack of access to external finance was not the main problem, and the need to address the systemic risk of what to do if one of the Big Four should leave the market and that addressing member state differences in law, regulation and the supervision of auditors were more pressing. Respondents also called for more transparency, with more involvement of companies' audit committees and shareholders in the tendering process. EC commissioner Charlie McCreevy said: 'The current financial crisis makes it vital that we have a truly sustainable audit market, and the consultation results published today provide valuable insight into problematic issues. 'The Commission will now carefully consider what actions can be taken at EU level to encourage new market players, whilst ensuring that auditors' independence andaudit quality are not undermined.'
Be the first to vote

Rate this article

Related Articles