FRC Waters Down Audit Tendering Rules
Just FTSE 100 and FTSE 250 companies will have to put their audit out to tender at least once a decade or explain why they didn't. Previously it was proposed that all LSE listed companies would have to abide by this shakeup.
In a consultation document published today, the FRC said if it had rolled out the change to all the listed companies it would have resulted in too many companies rushing out to change auditor in the same year.
It also added that the proposed change could be deferred by five years for some companies.
ICAS has hit back that although it welcomes the moves to encourage more frequent tendering of audit appointment the onus on the frequency of rotation should be placed on the audit committee.
However, the proposal to encourage more informative reporting by audit committees, including on the process of appointing an external auditor was welcomed by the institute.
The changes come before the European Commission is due to release its planned reform, which will see companies having to change auditor every six years, unless they opt for a joint audit which would allow them to keep the same firm for up to nine years.
Earlier this week it was announced that the Dutch parliament was considering changing its rules so that companies would have to change auditor every eight years.