Following its market investigation into the supply of statutory audit services to large companies in the United Kingdom, the Competition Commission announced its provisional decision on remedies on 22 July 2013. Its proposals include the following:

  • FTSE 350 companies should be required to put their statutory audit engagement out to tender at least every five years, subject to a five year transitional period;
  • the FRC’s Audit Quality Review team should review every audit engagement in the FTSE 350 on average every five years;
  • clauses in loan documentation limiting the company’s choice of auditor to one of the ‘Big-4’ audit firms should be banned;
  • shareholders should have an advisory vote on whether the audit committee’s report contains adequate information;
  • the accountability of the external auditor to the audit committee should be enhanced and the influence of management reduced; and
  • the FRC should change its constitution to include a secondary objective to have due regard to competition.

The Competition Commission invited comments on its provisional decision by 13 August 2013 and is due to publish its final report by 20 October 2013.

Competition Commission Press Release (with a link to a summary of the Commission’s provisional decision on remedies) available at:

http://www.competition-commission.org.uk/media-centre/latestnews/2013/Jul/cc-outlines-measures-for-audit-market