The UK Competition Commission (CC) is to delay the implementation of the remedies for the UK audit market, which include 10 year mandatory retendering, until more is known on the European audit reform expected to be voted on by the EU Parliament in February.
The CC said that the EU reform regulation and directive documents are "likely to be finalized and come into force in the second quarter of 2014" and the watchdog is "keen to follow the principles of better regulation including by ensuring that our orders do not contradict or duplicate EU regulation".
"Therefore, in the light of these developments we have extended our administrative timetable to enable us to consider fully the implications of the EU proposals on our own orders. We anticipate further rounds of consultation on our revised orders in the third quarter of 2014 and a commencement date in quarter four, " the CC said.
In December the European Parliament, EU Council and the European Commission reached an agreement which determines compulsory rotation of public interest entities’ (PIEs) auditors after 10 years, after which period it allows the possibility for member states to allow the auditor or audit firm to continue audit of the same PIEs up to the maximum duration of 20 years where a public tendering is conducted.
The agreement also proposes a 70% cap on the fees earned for non-audit services rendered to an audit client, therefore an audit firm would not be able to tender for non-audit services worth more than 70% of the audit fee.
Prior to the EU consensus the CC announced in September that UK audit firms will have to retender their FTSE 350 audits at least every 10 year, however the regulator did not find enough evidence to support mandatory rotation of audit firms.
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