Following the publication of the Competition and Markets Authority’s (CMA) report on the future of the audit market, Maggie McGhee, ACCA executive director – governance, said:
‘In its response to the CMA’s December 2018 update paper, ACCA highlighted the risks to audit quality of the CMA’s proposed remedies to increase choice in the audit market. We are therefore disappointed that many of these remedies have been carried forward unchanged in the CMA’s final report.
‘We maintain that other measures, such as a cooling-off period after rotating off the audit and a prohibition on management dismissing an audit firm, would be more effective in increasing audit quality in the short term. These measures would also allow the CMA more time to understand the impacts of its remedies by introducing them on a small-scale trial basis. ACCA made these recommendations to the BEIS Select Committee in our evidence. The BEIS Select Committee strongly recommended these proposals for consideration by the CMA.
‘By introducing such wide-ranging proposals simultaneously, the CMA may fail to identify the policies that increase audit quality due to those that harm it. Instead, ACCA believes the CMA should use its proposal for a five-year review of progress to trial, rather than mandate, their recommendations in order to give an informed and balanced understanding of their viability.’