OFT is on the audit case - hopefully.
The OFT is on the case. That’s the upshot this week from the Budget which saw news that the government has called on the Office of Fair Trading (OFT) to look at an increasingly controversial issue in the audit market – restrictive clauses imposed by banks.
These clauses are often included by banks in credit agreements and force clients to use a Big Four firm as part of the conditions in covenants.
Mid-tier firms have argued for some time that such clauses skew the market for audits forcing most publicly quoted companies into the arms of Big Four auditors.
However, the government’s call at last acknowledges in part that the clauses could be a problem.
Until recently such clauses were viewed as something of a mystery with everyone claiming they were wrong but many insisting their use was unlikely to be widespread. Companies, on the other hand, have been reluctant to reveal what they have or haven’t agreed.
An OFT investigation would therefore be welcome and is, in fact, overdue. It would be the first step to clearing up the issue once and for all and acting upon any conclusion drawn. Other regulators, namely the Financial Reporting Council, have talked a good game on restrictive clauses and the audit market in general, but have produced little by way of any progress. Any progress at all.
Oddly, we hear that the OFT has not yet decided to push ahead with the inquiry. It won’t do that until a board meeting in April. Having been asked by government however, they could hardly turn the invitation down.
More about:
The numbers you crunch tell a story. Your expertis...
13yEmbracing user-friendly AP systems can turn the tide, streamlining workflows, enhancing compliance, and opening doors to early payment discounts. Read...
View articleOrganisations can enhance their financial operations' efficiency, accuracy, and responsiveness by adopting platforms that offer them self-service cust...
View articleIn a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...
View resourceDiscover how AP dashboards can transform your business by enhancing efficiency and accuracy in tracking key metrics, as revealed by the latest insight...
View articleThere is usually a silver lining to every dark cloud, and the one hanging over the UK accounting sector is no exception, says Leon Kamhi, Head of Resp...
View articleUnstructured, broader, real-time data - and who wants to use that information - is having a massive impact on the direction of travel for the audit pr...
View articleLucrative GSK audit shifts to Deloitte from PwC Read More...
View articleHMRC receives highest number of complaints in seven years; Deloitte scoops BP and Centrica audits; and corporate reporting under the microscope in our...
View articleBDO has scooped the audit role from Deloitte who were the previous auditors for Game Digital Read More...
View articleBDO’s investments in digital, its international network and culture meant it was “perfectly placed” to succeed, according to new managing partner Paul...
View articleHead of editorial Kevin Reed discusses the accountants in the new cabinet; the FRC's report into audit market concentration; and the Top 40 Internatio...
View articleThere are a few key considerations for auditors as they plan upcoming interim reviews and year end audits in light of the Brexit vote Read More...
View article