The case against audit firm rotation was strengthened this week after new research was submitted to DTI and Treasury officials revealing deep concerns about the additional cost and reduced quality of such a move
Link: Firms give audit rotation thumbs down
Evidence compiled over the past few months by the UK industry regulator, the Review Board, shows the disadvantages of audit firm rotation overshadow the advantages.
Colin Reeves, Review Board director, said: ‘International experience suggests the disadvantages of audit firm rotation in respect of increased learning costs and potential audit failures in the early years outweighs the advantages of the new firm bringing an innovative perspective to the audit.’
The research will be fed into the coordinating group on audit and accounting issues – set up by the DTI and the Treasury in the wake of the Enron collapse – which is due to report its findings in the next few weeks. The Review Board concluded ‘changing the auditors should be a decision made by the company and not be mandatory’.
The Board also recommended that where an auditor had been in place more than five years, a company should ‘provide an explanation as to why it is felt independence is not impaired’.
Last week an Accountancy Age survey found just one of the top 30 firms supported mandatory rotation.
The numbers you crunch tell a story. Your expertis...
21yEmbracing user-friendly AP systems can turn the tide, streamlining workflows, enhancing compliance, and opening doors to early payment discounts. Read...
View articleOrganisations can enhance their financial operations' efficiency, accuracy, and responsiveness by adopting platforms that offer them self-service cust...
View articleIn 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 resourceDiscover how AP dashboards can transform your business by enhancing efficiency and accuracy in tracking key metrics, as revealed by the latest insight...
View articleThe Bank of England has appointed Ernst and Young LLP (EY) as its external auditor from the financial year ending 28 February 2025. Read More...
View articleThis follows an investigation into undisclosed personal loans and issues with an acquisition. Despite challenges, the company aims to achieve £1bn in ...
View articlePwC's decision to delay promotions in its graduate scheme, affecting around 100 graduates, is a response to reduced client demand and the aftermath of...
View articleTraditionally, audit schedules have been prepared manually, consuming significant time and resources. However, with the advancements in Artificial Int...
View articleThe FRC is promoting initiatives to foster a more competitive market, following recent high-profile accounting scandals. Read More...
View articleOn January 27, it was reported EY had quit as auditor to Asda amid one of its senior partners starting a romantic relationship with billionaire chief ...
View articleDespite the increased interest in AI and ML, only 12% of respondents indicate their organisations have adopted AI and ML within their audit functions....
View articleAs the government's independent investigation progresses, it is hoped that a clearer picture will emerge, leading to meaningful reforms within the aud...
View article