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CMA launches immediate review of audit sector

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17 Oct 2018

The Competition and Markets Authority (CMA) has announced a detailed study of the audit sector.

The study is focussing on three sets of issues:

  • choice and switching
  • the long-term resilience of the sector
  • the incentives between audited companies, audit firms and investors

The CMA has issued an invitation to comment with a deadline for responses of 30 October 2018. The webpage for the study, on the CMA website, contains more details.

In addition to the review, the Secretary of State has written to Sir John Kingman, who is undertaking a review of the Financial Reporting Council. In his letter to Sir John, the Secretary of State asks him to also provide his thoughts on:

  • whether there is any case for change in the way in which audits are currently procured, and audit fees and scope are set, particularly for major companies of public interest; and
  • whether any change could better promote the interests of users of accounts – and ensure quality, rigour, independence and scepticism on auditors’ part – whilst at the same time, of course, needing to be feasible and workable in practice.

The Secretary of State has asked the CMA and Sir John to liaise with each other.  The letter is available here.

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