[ad_1]
The competition watchdog has called for a major reshuffle of the four major UK audit firms, but has not recommended dissociating them.
In final recommendations that echoed its tentative conclusions, the Competition and Markets Authority (AMC) ignored calls from MPs earlier this month to dissolve KPMG, Deloitte, PwC and EY.
Instead, the regulator has tabled four proposals to soften its grip on the sector, including an operational split between the audit and non-audit branches of KPMG, Deloitte, PwC and EY.
Audit departments need to be separated from their consulting firms, which are often much larger, to improve the quality and targeting of difficult audits, the CMA said.
Greater choice and greater competition should also be introduced into the market through a mandatory joint audit, allowing competing firms to work alongside the big four.
It recommends that a common audit procedure remain in place until the choice is sufficiently improved to "address the vulnerability of the market to the loss of one of the big four" .
He also asked a regulator to make the company's "audit committees more accountable", including public reprimands against those who are not adequately supervised by the company. listeners.
A five-year review of progress made by the regulator should also take place to periodically review the effects of these changes.
The call for change comes during a period of intense surveillance following the collapse of Carillion and BHS.
He intervenes after the Financial Reporting Council's review last year by the president of Legal & General, Sir John Kingman, who called for the abolition and replacement of the audit body. by a new regulator.
Lord Tyrie, President of the AMC, said: "The livelihoods, savings and pensions of people all depend on the high quality work of the listeners.
"But too many are below expectations – more than a quarter of large corporate audits are considered substandard by the regulator, and that can not continue.
"The government now has three reports at its disposal, and most of the time they come to similar conclusions.
"Conflicts of interest can not persist, the UK can no longer afford to rely on only four companies to audit the largest UK companies."
In 2016-17, EY, PwC, KPMG and Deloitte accounted for 97% of FTSE 350 audits and 99% of FTSE 100 audits.
Andrea Coscelli, Director General of the CMA, added: "We look forward to supporting the government, which is considering how best to move these changes through legislation, along with Sir John Kingman's regulatory recommendations. and to the results of the quality review and audit. "
CBI President John Allan said, "The UK's position as a global leader in corporate governance is highly valued, but some of its proposals may damage its reputation.
"Compulsory joint audits will impose additional costs and complexity on businesses without guaranteeing better results, operational splits could limit access to the skills required to perform complex audits."
Rachel Reeves, Chair of the House of Commons Committee on Common Business, Energy and Industrial Strategy, said: "We welcome the CMA's recommendations to address serious market failures. to audit and put an end to the Big Four's hold.
"We agree that it is high time that their audit work be divorced from their advisory services in order to resolve the conflicts of interest that have persisted for too long."
"We welcome the proposal to separate external audit services from non-audit services to improve standards, eliminate potential conflicts of interest and to Ensure the independence of external auditors to reduce risk, "said Dr. Ian Peters, Executive Director of the Chartered Institute of Internal Auditors. from another collapse of Carillion style ".
[ad_2]
Source link
