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FRC publishes notes on best practice for audit tenders

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09 Feb 2017

The Financial Reporting Council (FRC) has published revised notes for Audit Committees on best practice for audit tenders.

The FRC indicates that retendering and rotation of auditors, as required by law, helps improve confidence in audit for investors and audit committees whose job it is to appoint them.  

It highlights that the goal of Audit Committees in the tender process is to appoint the audit firm that will provide the highest quality, most effective and efficient audit.  The notes seek to give ideas to Audit Committees regarding how to make the appointment process effective.  As the audit tendering process can also be expensive, the notes also provide Audit Committees with some ideas regarding efficiencies that could be made in the tender process. 

The notes were developed after holding roundtables with Audit Committee Chairs who had recently gone through an audit tender process or who were about to do so.  Roundtables were also held with representatives from the investor community and senior audit engagement partners from the Big 6 audit firms along with specialists from their “bid-support” teams. 

The notes cover areas from timing of the tender to the formal decision process.  

The press release and notes are available in the FRC website.  The Investment Association has also published its own set of guidelines on audit tenders to set out the expectations of UK institutional investors when companies tender their audits.  This is available on the Investment Association website here.  

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