RSS feedsAll talk and no actionTo the observer, it must seem like the audit competition and choice debate has been grinding on for a long time.
From its first rumblings, to the fervour generated by the Oxera report, to the public meetings as the consultation has progressed, opinions have been in plentiful supply.
The firms who want to bring a new dimension to the profession (including my own) have not tired in putting forward their views and making their concerns known.
Our opposite numbers at the Big Four have worked just as hard at countering them.
In addition, companies and other key stakeholders have spoken up on behalf of end-users. None of these words have been wasted: resolution of this issue is fundamental to the future shape and direction of the audit profession, and moreover, to the health and vitality of the financial system it serves.
But how do we move on from the rhetoric? How do we make sure that the outcome of the FRC/MPG initiative rings true with the original purpose?
The focus now needs to be on taking constructive action. We need to prioritise measures that will have the greatest impact in practice and help bring about the reforms that will ultimately lead to a better market for all stakeholders.
More frequent audit tendering has to be the foremost among these: without a significant increase in the number of tenders and auditor changes it will be almost impossible to redress the current levels of concentration.
This should go hand-in-hand with a more open selection process. All interested firms should be invited to submit a brief preliminary proposal, and a shortlist can then be drawn up of firms to submit a full proposal.
Providing more information in audit committee reports would be another positive measure. This could include when the company's auditor was first appointed; the company's policy on audit tendering, and when the audit was last put to tender. Banks and brokers could also take steps to eliminate the perceived bias that it is sometimes felt they exert in favour of the Big Four. Finally, more consideration should be given to joint audit and independent study carried out into its merits during these tender discussions.
A final report and recommendations are due by the end of the year. Let's hope that a down-to-business mindset prevails as we move into September and prompts a shift in gears so we ¬ audit firms and companies together – can seize the chance for positive action.
David Herbinet is head of public interest markets at Mazars
