Audit reforms could lead to less protection, say firms
Survey of Top 100 firms shows that 63% believe reforms such as auditor rotation will provide less protection for investors and the public
THE FRC’S AUDIT REFORMS could lead to higher costs, less scrutiny and reduced protection, according to a survey of accountancy firms.
As part of the proposed reforms, the FRC is calling for companies to put their audit out to tender every ten years to create greater transparency.
However, 63% of firms believe the change could lead to less protection for investors and the public, according to a survey of the Top 100 firms by accountancy IT provider CaseWare.
The survey, which was carried out in June, found although many accountants understood the FRC reforms hope to increase competition among firms, more than half felt the measure would lead to less thorough audits.
“Our survey particularly highlighted the worry that any new auditor would have considerably less experience and knowledge about the company it is auditing,” said Shez Hamill from CaseWare.
“In such cases, it could take several years to replicate the understanding that was in place prior to the rotation. This could well lead to investors and the public being less protected.”
Out of the 100 firms questioned, 30 responded to this particular question, with 19 showing they did not support auditor rotation.