The UK Department for Business, Innovation and Skills (BIS) has started the debate on the options left by the EU audit reform by publishing a discussion paper aimed at gathering the views of stakeholders.
As reported by The Accountant, the BIS set up a group of interested parties, including accounting firms, professional bodies, companies and investors, which informed the early stages of the consultation.
The group was convened by the UK Financial Reporting Council (FRC) and met on a monthly basis for most of this year.
With regard to audit rotation, BIS proposes a flexible approach. The consultation suggests a framework which would make possible to rotate earlier than 10 years, "but still be able to extend the maximum duration beyond that".
In particular BIS proposes companies to report, as a new element of the Director’s report, their plans to retender the audit engagement, making "binding" such an announcement in the report.
The UK Government wouldn’t seek to make special provisions for joint audits. BIS proposals therefore don’t take up the 14-year extension by appointing a joint auditor, as allowed by the EU rules.
Instead, to ensure consistency with the recent Competition and Markets Authorities rules, companies could keep their current auditor for another ten years, if a second auditor is appointed after tendering.
Regarding the provision of non-audit services and caps in audit fees, BIS is seeking views on whether or not the consultation on those services should be delegated to the FRC, as the accounting regulator deals with ethical standards and auditor’s independence.
The FRC has also issued a consultation on the matter. The deadline to comment on BIS discussion paper ends 19 February 2015, whereas FRC consultation ends 20 March 2015.
EU audit implementation: Key consultation expected in the UK