Audit tendering

FRC has issued Audit Tenders: Notes on best practice. It offers suggestions to improve the tendering process. It is aimed at FTSE 350 companies but could equally be used as guidance for any tender. The best practice key steps highlighted are:

  • establish clearly the objectives for the tender, why it has been initiated and engage with major investors on these points;
  • choose which firms to invite to tender based on clear criteria and the views of investors;
  • ensure the process is led by the Audit Committee chairman;
  • provide audit firms with adequate information for them to understand the company‚Äôs needs;
  • make the decision based on audit quality not price and do not rule out the incumbent auditor without good reason;
  • manage an orderly transition to ensure a seamless handover;
  • ensure the regulatory requirements such as independence rules are met;
  • make use of audit inspection reports.