FTSE-100 audit chairs question audit market reform

FTSE-100 audit committee chairs have questioned the rationale behind proposals currently being considered by the European Commission (EC) to reform the audit market.

Many of the chairs believe that given the lack of evidence that failings in audit either caused or helped to speed up the credit crisis, means no case for reform has been made, according to research commissioned by the ICAEW.

However, the research suggested that the current level of market concentration is not ideal, with BDO the only firm outside the Big Four to audit the FTSE-100.

The research also made a number of recommendations, including increased competition and choice, continuing focus and reassurance on auditor independence and greater use of third-party and peer review of audit practices.

ICAEW chief executive Michael Izza (pictured), said: “When considering its proposals, the European Commission cannot ignore the voice of business. As this research shows, there is scepticism over the rationale for these proposals, but a recognition that change is needed in a number of areas to ensure UK audit quality remains world leading.”

A final version of the EC’s audit reforms is expected soon and will be considered by the College of Commissioners on 23 November.

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