THE FINANCE DIRECTORS of the UK’s largest listed companies are “deeply concerned” about radical EU proposals to restructure the audit market, it has emerged.
The Hundred Group of Finance Directors (100 Group) has sent a letter to the UK’s European commissioner Cathy Ashton warning that splitting the audit and non-audit divisions of the global audit firms, and mandatory rotation of audits, would reduce audit quality and increase cost.
“In our view, these proposals show a fundamental misunderstanding of both the way that external audits are conducted and the current structure of the audit market,” stated the letter.
“They will have the effect, both directly and indirectly, of reducing audit quality, increasing cost and diminishing the value of the audit opinion to investors, without any compensating tangible benefits.”
The letter was sent following Accountancy Age’s revelation that EC commissioner Michel Barnier is proposing sweeping changes to audit, which also includes mandatory joint audits.
100 Group chairman and Vodafone CFO Andy Halford (pictured) said: “We are deeply concerned to hear that the European Commission is considering legislating for mandatory joint audits, mandatory auditor rotation, the creation of specialist audit firms and the widespread prohibition of non audit services.”
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