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BEIS Select Committee publishes "The Future of Audit" report

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04 Apr 2019

The Department for Business, Energy and Industrial Strategy (BEIS) Select Committee has published its "Future of Audit" report. The report looks into reforming the UK audit market.

The BEIS report is one of a number of reviews that are taking place, or have taken place, looking at different aspects of the audit market, including a Competition and Market Authority's (CMA) study into audit, the Brydon review on the future of audit and the Kingman review of the Financial Reporting Council (FRC).

The BEIS Committee's inquiry into the future of audit was launched on 12 November 2018 (link to Parliament website).  The object of the inquiry was to examine how the three reviews, indicated above, would complement each other, given the links between the quality of the product, its regulation and the health of competition. The BEIS Committee wanted to ensure that what emerged from these reviews was a coherent framework for auditing that could regain the confidence of investors and the public.  

The BEIS report is the output of a series of hearings that have been held with leaders of the Big Four audit firms, investors, academics, Audit Committee Chairs, the UK audit regulator, mid-tier firms and Government stakeholders.

Among the recommendations are proposals for at least an operational split of audit and non-audit services, with a structural split to be considered if this is deemed ineffective after three years; piloting joint audits between a Big 4 firm and a challenger firm in the 'upper reaches' of the FTSE 100, in conjunction with a cap on the market share of individual firms. These are alongside wider calls for a stronger regulator, a UK version of Sarbanes-Oxley and expanding the scope of audit.

Rachel Reeves MP delivered a keynote speech launching the committee’s report into the future of audit in Chartered Accountants’ Hall.

The full report and the keynote speech are available on the Parliament website.

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