Intervention in the UK audit market remains a possibility, the Financial Reporting Council has warned, if current efforts to open up the market prove unsuccessful
Paul Boyle, FRC chief
executive, made the pledge at the second stakeholder meeting on audit choice
held last week. ‘The FRC recognises the need to review its position, if
market-based solutions are not effective,’ Boyle told the gathering at the Royal
Society of Arts in London.
The recommendations to open up the market include bringing firms within the
Combined Code, and encouraging outside investors into the market
Some have argued that the process has effectively reached a dead-end with all
radical proposals watered down by compromise. BDO managing partner Jeremy Newman
told Accountancy Age: ‘At present there is no real evidence of a willingness to
put aside individual preferences.’
He added that the regulatory threat was the main contribution to the debate
that the meeting had to offer.
Boyle said that the law of unintended consequences applies for those who said
the recommendations should have been tougher.
‘You could be very tough but also cause more problems than you set out to,
like Sarbanes-Oxley did. And secondly, as the Companies Act reveals, if one
relies on a legislative solution, it can be a very slow process, whereas the
recommendations in the MPG report can be practically implemented in a reasonably
short period,’ said Boyle.