A study into auditor rotation has supported firms' reservations about plans to force the rotation of company auditors. The study, carried out in Italy where auditor rotation has been mandatory for nearly 30 years, found the benefits of rotation were not as obvious as expected. It found audit firms in their first year with a company were more likely to be cautioned by the stock market regulator than in any other year.
Formal consultation
on orders widening the powers of comptroller and auditor general Sir John Bourn has been launched by the Treasury. This follows recommendations of the Sharman Report on the scrutiny of government bodies and greater accountability for public funds. The proposals will see Sir John become auditor of all non-departmental public bodies.
The ICAEW has welcomed the DTI’s interim report on audit reform, citing proposals for an enhanced role for company audit committees as its ‘most important recommendation’. Backing a role for the committee in the appointment and remuneration-setting process for auditors, it said: ‘This change alone will do a great deal to improve both auditor independence and audit quality.’
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