THE LATEST consultation from the Department for Business Innovation and Skills (BIS) on the technical legislative implementation of the EU Audit Directive and Regulation, has been published.
At its heart is a compulsion for Public Interest Entities (PIEs) to put their audits up for grabs every decade and swap auditors every 20 years, in addition to limiting the level of non-audit fees.
Hywel Ball, EY’s UK head of audit, said the ‘10 plus 10 regime’ will empower UK companies to retain their incumbent auditor for 20 years, as long as they tender by the 10th year.
Ball said: “The government is mindful of the need to consider whether the regulatory burden can be reduced, for example it is looking to provide more flexibility than the EU legislation might appear to give by allowing companies to tender at the time of their choosing, provided that they leave it no longer than 10 years between tenders.
“They have also given comfort to a small number of companies who haven’t had their auditors for very long but who, for various reasons, have tendered the audit in the last couple of years. Until the government provided this clarity, these companies faced a rather curious prospect of having to tender their audit once again in close succession. By helping to iron out the effects of this regulatory quirk, it has avoided what would have otherwise have been a very costly and time intensive exercise for those affected.”
The BIS consultation is one of four currently being conducted in parallel to the implementation, by different regulatory authorities. Among them are the FRC’s consultation on the detailed changes required to its ethical standards, auditing standards, UK corporate governance code and guidance on audit committees.
The proposed changes to the audit landscape come at a time when auditors are set to be hit with increased levy demands from the profession’s watchdog as the government cuts all funding to the Financial Reporting Council (FRC) from 2016.
Since 2009, when the government pumped in £2.7m into the FRC’s coffers, it has progressively withdrawn its contribution and will stop providing direct contributions from next year.
KPMG set to take on the Legal & General audit from PwC, months after also nabbing Standard Life from its Big Four rival
Corrective action has been taken by Sports Direct into its international stores reporting, following a review by accounting's watchdog
Paul Boyle is appointed as the president of the Chartered Institute of Internal Auditors
Three new partners have been appointed at top ten firm BDO