The Association of Chartered Certified Accountants (ACCA) has expressed its concerns about the ‘breadth’ of evidence in the Competition and Markets Authority’s (CMA) review into the audit market.
While the ACCA said the ‘urgent pace’ of the CMA review helps to reduce uncertainty, it raises questions over the amount of evidence to justify the proposed changes.
The CMA only launched its review in October and published its proposals on 18 December.
The ACCA expressed concern in particular over there not being enough evidence demonstrating a positive impact on audit quality from the proposals of joint audits or a separation of audit and consulting within firms.
It said these proposals risk generating unintended consequences such as confusion over roles and responsibilities and greater barriers for audit teams in accessing expertise on complex issues, without alleviating the original issue.
ACCA said: “It’s important that any discussion of improvements to the system, legislation and regulation is focused primarily on improving audit quality, and ACCA will use this as the central premise against which to evaluate the proposals outlined in the respective reviews.”
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Despite expressing concerns, ACCA said it supported the CMA’s proposal to increase the accountability of audit committees.
ACCA supports the general direction of the overarching regulatory framework that has been proposed in the Kingman review, in particular the introduction of a statutory levy as it believes it will provide more security and greater independence.
It said: “With multiple concurrent reviews into the sector, it’s important that there is one final set of conclusions which incorporates a holistic review of the system, an understanding – and addressing of – the expectation gap as it stands, and due consideration of all recommendations to date. The Brydon Review could potentially be well placed to fill this role.
“ACCA is considering all proposals in more detail over the coming weeks. We look forward to working with the CMA, Kingman Review, BEIS Select Committee, Brydon Review and others into the New Year on the most workable solutions for improving audit quality.”
The CMA review has asked for initial responses to its proposals by 21 January 2019.