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December 7, 2011

Hundred Group rejects Barnier’s audit proposals

Finance directors of FTSE 100 companies are opposed to EC proposals on mandatory joint audit and firm rotation, according to a survey by the Hundred Group.

The group, which surveyed finance leaders of the UK’s 100 largest companies, found no support for mandatory audit rotation and joint audit, and less than 15% support for mandatory retendering.

Hundred Group chairman Andy Halford said the case for audit market reform is overstated and the proposals put forward by the EC could concentrate the market further.

“The draft regulations on mandatory audit firm rotation, audit tendering, the creation of audit only firms and a widespread prohibition on non audit services will still have very significant and profound implications for the way audits are conducted. In particular, the revised proposals requiring mandatory audit firm rotation after just six years represent a step backwards from the previously announced position.

“Contrary to the statement issued by the European Commission, these proposals will serve to concentrate the market even further as the combination of shorter engagement contracts, a cooling off period and prohibitions on non audit work will preclude participation in the audit tendering process of any firm providing non audit services, who are typically for our membership, other Big Four firms.”

 

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