Plans for auditor rotation afoot
Public companies could soon be forced to rotate their auditors every few years to avoid relationships becoming overfamiliar.
Under a broad review due to start in March, the Financial Services Authority will be looking at the possibility of auditor rotation.
A spokesperson for the FSA said: ‘We will be looking at corporate governance and auditor rotation will come under that review. But we have no definite plans to implement this.’
The proposal is part of a review of the London Stock Exchange’s listing rules led by Ken Rushton, head of listings at the FSA, the UK’s chief financial watchdog.
Non-accountants working in the profession have been calling for the rotation of audit firms for a number of years now, but nothing has come of it yet. The Enron scandal currently battering the US accounting profession has brought the issue to the fore again.
It emerged last summer that plans to force public companies to report on a quarterly basis were also under consideration by Rushton.