Treasury could back auditor rotation
The Treasury could force companies to switch auditors every seven years under reforms that could also prevent auditors selling consultancy advice to their clients.
According to The Times, the Treasury review of auditing, set up in the wake of the Enron scandal, will conclude in an interim report this month that says company audit firms should be rotated every seven years to shake up the ‘cosy’ relationship between auditor and client.
This would also prohibit firms selling management consultancy services to their clients, though it remained uncertain how such services would be defined.
The review, led by Ruth Kelly, financial secretary to the Treasury, and Melanie Johnson, trade and industry ministry, is also expected to address audit and accounting standards.