ACCA responds to Department for Business audit consultation

In response to the Department for Business, Energy and Industrial Skills’ initial consultation on recommendations by the Competition and Markets Authority, Maggie McGhee, ACCA’s executive director – governance, said:

‘In assessing the remedies proposed by the Competition and Markets Authority (CMA), ACCA reiterates our long-held belief that any proposals must focus primarily on increasing audit quality.  It is fundamental to investor and public confidence and the longevity of audit reform.

‘ACCA is not supportive of the joint audit proposal in the CMA’s interim study, and our position remains unchanged. The final proposal which requires FTSE 350 companies, with limited exceptions, to be jointly audited by at least two audit firms, with at least one being a non-Big Four firm, does not address the concerns that we raised in our initial response.

‘There is an insufficient evidence base to demonstrate that the proposal will not be detrimental to audit quality - the evidence from academic research is mixed at best.

‘ACCA recommends using the joint audit proposal for a five-year review of progress to trial, rather than mandate, recommendations in order to give an informed and balanced understanding of their viability.

‘Our proposed interventions include a two-year “cooling-off” period following the end of an audit relationship during which the former audit firm is prohibited from selling services to the entity and considering a prohibition on management from firing their auditors during their terms of service.

‘Ministers, including BEIS’ new secretary of state Andrea Leadsom, should consider carefully the evidence base available in support of each suggestion, the related cost/benefit analysis, and the practicalities of implementation.’

 

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About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development.

Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: www.accaglobal.com