Compulsory audit tendering is disrupting the market, but what are the risks in the transition phase. With closer oversight from the regulator over potential risk areas, Philip Smith talks to FTSE audit chairs and practitioners
And so the merry-go-round continues. Hardly a week goes by without the announcement from a FTSE 100 company that it has switched auditors. Occasionally, one of the blue chip businesses decides to stick with its existing audit firm, but more often than not the London Stock Exchange announcement will reveal that one of the Big Four accountancy firms – PwC, Deloitte, KPMG and EY – has been replaced by another.
Audit relationships lasting many decades are being swept aside as new rules force companies to trade in one firm for a newer model. It appears to be a full-time job for audit committees as they first weigh up whether or not to put the audit out to tender, then decide on a timeframe, send out requests for proposals, set up meetings with those that respond, listen to the pitches, make a decision and then, finally, put a recommendation to the board. Sometimes, this is for the same firm.
