Audit report: Govt backs away from mandatory rotation of firms

Audit report: Govt backs away from mandatory rotation of firms

Government has shied away from enforcing mandatory audit firm rotation but has left a door open for the Financial Services Authority to review the issue.

In a report from the government’s joint Department of Trade and Treasury working group on audit, ministers avoid a principle recommendation made yesterday by the Treasury select committee to requireing audit committees to review every five years whether they should keep their auditors.

The report, obtained by Accountancy Age ahead of a statement by trade secretary Patricia Hewitt, says: ‘We conclude that the case for mandatory rotation as a solution to the problems of auditor independence has not yet been made.’

However the report leaves the way open to reconsider the decision if evidence from the Ethics Standards Board and the FSA deem the move necessary.

‘We believe that there is a need to examine further the evidence and the arguments for and against mandatory audit firm rotation,’ said the report compiled by the Coordinating Group on Audit and Accounting Issues, set up in the wake of the collapse of Enron, the US energy giant.

The CGAA group has also passed over the issue of re-tendering to the ongoing review conducted by the ESB and the FSA.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In 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 resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource