Competition Commission opts for 10-year audits

The Competition Commission (CC) has backtracked on its requirement for companies to tender for a new auditor every five years and instead is calling for FTSE 350 companies to tender every 10 years.

Following a long investigation into competition in the market, the final report published this morning will for many be seen as a victory for the Big Four accounting firms.

The commission claims to have been “listening carefully” to industry feedback over the last two years and decided that 10 years is an appropriate period. However, despite backtracking from its original proposals, the watchdog said it still believes many companies would benefit from going out to tender more frequently at every five years.

The main measures the CC has proposed are as follows...

Continued...

» Register now

The full article is available to registered AccountingWEB members only. To read the rest of this article you’ll need to login or register.

Registration is FREE and allows you to view all content, ask questions, comment and much more.

Comments
DMGbus's picture

Ten years of risk instead of five for shareholders

DMGbus | | Permalink

In the allegedly unlikely event of auditors being too pally with management the original proposal for a short period of time before rotation of auditors had a lot of merit.

There were however downsides, such as potential extra costs and disruption in changing auditors and maybe "signature sellers" having a less comfortable time and at risk of reduced profits plus (oh dear! more competition amongst auditors).

So, we'll have to see how things go with the revised proposals, and hope that those auditors who appear to have been historically "rubber-stamp" "signature sellers" by being too pally with management will change their focus to the real job in hand - WORKING FOR THE SHAREHOLDERS rather than for management.

[ I'm sure I've read somewhere of a bank insider reporting irresponsible lending to the auditors, then the auditors made a report to rubbish the insider's claims (and in doing so lend support to bad management) - then a few years later the insider / information / whistle-blower was seemingly correct  - a classic case of "signature sellers" being too pally with management and free from effective sanction ].

{ I'm sure that I've heard a report of a conflict of interest case where the signature sellers, having been very well cosy with management then went onto continue to work for said management after a particular issue with potential damaging conflict of interest for stakeholders}.