Mazars has called for the Market Participants Group's (MPG) recommendations on improving choice in the audit market to be improved.
The firm says that to improve choice, the MPG will need to develop its proposals in more detail, focusing on those that will have most impact and ensuring they are vigorously implemented.
Mazars head of Public Interest Markets and MPG member, David Herbinet, said the profession should 'not shy away from the word "competition".
'The bulk of available evidence points to a clear lack of it,' he said. 'It’s critical that we increase choice through competition if we are to create a more dynamic, innovative market focused on quality.
'When FTSE 100 auditors can expect to remain in place for 48 years and 70% of those audits are not put out to tender in at least a 15-year period, this does not suggest a healthily competitive market able to offer real choice to end-users.'
The main ‘high impact’ reforms supported by Mazars are:
• more frequent audit tendering, with disclosure of when the incumbent auditor
was appointed and when the last formal audit tender was held;
• a broader, more open selection process, with all firms being given the chance
to submit outline proposals;
• improved disclosures in the audit committees’ report;
• an independent study, under the FRC’s auspices, on the benefits of joint
audits.
The firm also believes that regulatory intervention may become necessary if the MPG’s market based initiative does not achieve results in a reasonable timeframe.
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