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CMA finalises UK audit market reforms

  • Auditing Image

29 Sep 2014

The Competition and Markets Authority (CMA) has published its final Order implementing reforms of the audit market in the UK, following on from the Competition Commission's report into the market and in light of agreement at a European level on audit reform.

Following on from the draft Order published in July, the CMA has now finalised its package of remedies to increase competition within the provision of statutory audit services to FTSE 350 companies in the UK.

The final Order includes:

  • a requirement for FTSE 350 companies to put their statutory audit engagement out to tender at least every 10 years, in line with the EU Regulation on the statutory audit of public interest entities; and
  • measures to strengthen the accountability of the external auditor to the Audit Committee and reduce the influence of management.

The Order will come into force on 1 January 2015 and apply to financial years beginning on or after 1 January 2015.  This means that the audit committee’s terms of reference will need to be revised for 2015.  However, in relation to tendering it contains transitional provisions, which align with those contained in the EU Regulation.

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