James Moore: Commission drops the ball on auditor rotation
Outlook One aspect where lots of companies could do with improving their housekeeping is in the rotation of auditors.
Corporate brokers may come and go, but auditors typically stay put. Some 80 per cent of FTSE 100 companies haven't changed their auditor for 10 years.
Yesterday, the UK Shareholders' Association weighed in on this debate, criticising the Competition Commission (CC) for its decision not to go ahead with mandatory rotation of auditors as part of a review into a market dominated by the Big Four accountants.
The CC's intentions are good, but in dropping mandatory rotation in favour of measures such as strengthening the auditors' regulator, it may have dropped the ball. The audit regulator, as the association says, is not accountable to shareholders. Auditors should be, but the suspicion has long been that because company bosses hold the purse strings, they call the tune.
Forcing rotation would help prevent relationships getting too cozy. The CC should heed the association's views and give its proposals a spring clean.
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