ICAS tells FRC to leave audit to 'market forces'

ICAS has called for audit choice to be left open to market forces, and not altered 'artificially'.

In response to the Financial Reporting Council's discussion paper on the Oxera report, which raised questions over the limited number of firms providing audit work for the FTSE 350, the Scottish institute said that the FRC should leave companies to make their own free choice of auditor.

David Wood, executive director, technical policy said: 'We don’t believe that it is feasible to increase choice in the audit market through artificial intervention. In our view market forces will ensure appropriate choice and, over time, may encourage more participants into the large company audit market. Whether FTSE 350 companies choose to use a mid-tier or a Big Four auditor is a matter for them, but the choice is certainly available.'

ICAS also gathered responses from 50 FTSE 350 audit committee chairmen on their view of the audit market. More than 50% said they were likely to tender for audit services in the next five years. Three-quarters of respondents said the FRC should leave the audit market to market forces.