Audit choice risks remain despite recommendations, FRC admits

The Financial Reporting
Council has warned that the risks posed by audit market concentration are
still prevalent, despite the recommendations put forward by its Market
Participants Group.

In its third progress report on the implementation of the recommendations,
the FRC noted that while there has been significant developments based on the
MPG’s suggestions, some measures will have limited impact in the short term and
the risks of market concentration continue.

‘Despite the progress that has been made, the FRC continues to have
significant concerns about the risks posed by audit market concentration and
believes that these risks are likely to continue for the medium to long term,’
said FRC chief executive Paul Boyle.

Since the last report, the CCAB has issued a voluntary code of practice on
the disclosure of audit profitability and the FRC’s Audit Inspection Unit has
published reports on audit firms that have been subject to a full review.

The FRC said that the majority of the recommendations had now been
implemented, with the rest expected to be in place in the next six months.
However, work was still needed on an international level on the oversight on
global networks.

Further reading

Choice
in the UK Audit Market: Third Progress Report