THE UK’S LARGEST LISTED BUSINESSES are providing more information about the tenures of their current auditors in response to tendering provisions laid down by the FRC.
According to analysis by Black Sun 63% of FTSE 100 annual reports gave either the number of years they have been with their current auditor or the year when the tender last took place.
Companies are now required to put their audits out to tender at least every ten years or explain why they haven’t under changes to the FRC’s corporate governance code. But while businesses provided information about their last external tender, information about when the next tender will take place is covered by far fewer companies, the report found.
Regulators are increasingly looking at ways of breaking the Big Four accounting firms’ dominance of the large-listed audit market and have questioned the “cosy” relationship between companies and their auditors.
Alongside the FRC’s comply-or-explain approach, the Competition Commission is considering imposing mandatory auditor rotation as a way to shake up the market.
In response, a number of FTSE 100 businesses have recently signalled their intention to consider switching their auditors, with Land Securities this week changing its auditors for the first time in its 69-year history.
Audit committees are also providing more information about how they ensure the effectiveness of the external audit. Black Sun found that 67% of businesses are clear in this area, while some “provided real granularity around the processes undertaken”.
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Given the events of the past week as we enter new territory our SMEs now more than ever need the support of their accountants, writes Bobby Lane