US follows British lead on audit choice

Arthur Levitt, former Securities and Exchange Commission chairman

Forward thinking: Arthur Levitt

The US is to embark on UK-style measures aimed at opening up choice into the
concentrated audit market by requiring companies to disclose agreements which
predetermine the appointment of firms.

The suggestion was one of 13 recommendations from the US Treasury advisory
committee on the auditing profession, which examined issues of competition,
together with training, the structures of firms and their finances.

It suggested that smaller firms should be encouraged to grow, while public
companies disclose details of agreements with third parties, which could limit
their choice of auditor.

Participants Group
led the way with such recommendations in the UK.

The US group, led by former Securities and Exchange Commission chairman
, also recommended audit firms appoint independent partners charged
with governance oversight, with duties similar to those of a non-executive

Suggestions were also made for construction of a plan that would rehabilitate
and preserve a large auditing firm facing a collapse.

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