UK BANKERS have said that the appointment of auditors should not be taken away from company boards.
The views from the British Bankers Association come in response to the EU’s consultation on the reform of audit and the audit market. Today and tomorrow sees the European Commission stage a conference on the subject hosted by internal markets commissioner Michel Barnier (pictured).
In its reply to the consultation the BBA said: “The supporting text indicates that the question is whether the audit role should be viewed as one of statutory inspection wherein the appointment, remuneration and duration of the engagement of an audit firm would be the responsibility of a third party, perhaps a regulator.
“This in our view fails to understand the distinction between the regulatory regime and the audit and in the process would weaken the responsibility of the Audit Committee, which would be detrimental to investor interest and responsibility.”
The BBA also believes the claim that the audit market has become concentrated in the hands of the Big Four was “overstated”.
It also restated its belief that the use of special clauses by banks forcing clients to engage only Big Four firms was not “prevalent market practice”.
However, the BBA conceded that the regulator, the Financial Reporting Council, has had little success in persuading companies to disclose what their contractual arrangements are with banks relating to the use of auditors.
It added: “Within a UK context, there is an expectation (as much on the part of investors) that listed companies with a global reach will engage an audit firm with a global network and the reality is that only four of these exists.
“If, on the other hand, you look towards the lower echelons of the FTSE 350, at companies listed on the Alternative Investment Market (AIM), non-listed companies and non-corporate organisations then there cannot be said to be a bias towards the ‘Big Four’.”