PracticeConsultingMP introduces Bill for audit rotation

MP introduces Bill for audit rotation

Labour MP Austin Mitchell is to introduce a private members bill forcing the rotation of auditor firms for major companies in the wake of the Maxwell report.

The proposal would also ban accountants from doing non-audit work for companies they already audit.

Mitchell, MP for Great Grimsby, hopes to introduce the measure in the time opened up by the election delay as part of a campaign to pressure the government into action.

Describing the report into the Maxwell scandal as ‘too little too late’, he added that the report had ‘pussy footed around the blame’.

Mitchell, a persistent critic of the accountancy profession, told Accountancy Age: ‘I think there is an overwhelming case for a company to rotate auditors. That should not just mean partners in one firm but that audits should be started for a fixed term and then the firm changed.’

Auditor independence was put firmly back on the agenda with last week’s publication of the long-awaited DTI report on the Maxwell affair, which criticised Coopers & Lybrand Deloitte.

The DTI inspectors concluded there was a need for ‘more radical thought and wider debate in the UK on the issues of auditor independence.’

The report said that auditor independence would be a matter for the Accountancy Foundation, the profession’s new regulator. A Foundation spokesman said: ‘The question of audit independence will be on the agenda.’

Tony Bromell, head of professional standards policy at the ICAEW, did not accept the need to rotate audit firms. ‘It would not necessarily lead to an improvement in the audit. Issues are often better dealt with by continuity,’ he said.

  • Additional reporting by our parliamentary staffLinks

The Maxwell report

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