As reported in our January Update, a few months ago the FRC published a discussion paper entitled “Promoting Audit Quality”. Feedback from that discussion paper has been collated and the FRC has recently published its Interim Report. The report indicates that one of the chief concerns in the audit market is the uncertainty and costs which could arise in the event of one or more of the Big Four audit firms leaving the market. The report sets out 15 provisional recommendations to enhance the market and mitigate the risks associated with such an occurrence.
The recommendations are designed to reduce the perceived risk amongst directors of instructing a non-Big Four audit firm, improve the accountability of Boards for their auditor selection decisions, improve choice from within the Big Four and reduce the risks of firms leaving the market without good reason.