UK: Auditors worried over ‘illogical’ interpretation of new rules

As the Competition and Markets Authority readies to implement proposed laws governing the UK’s auditing market to boost competition, reports say auditors are concerned over the CMA’s interpretation of those rules.

The regulations will be adopted by 2016, and the CMA has so far held a consultation on the draft rules to discuss implementation. The rules were outlined by the CMA’s predecessor, the Competition Commission.

But some auditors argue that there is a risk of “illogical” interpretation of the rules. Among their concerns, say reports, is the possible requirement that companies with shorter audit tenures tender the position earlier than companies that have held on to the same auditor for longer.

The interpretation “would result in unintended, and adverse, consequences for many public interest entities across the European Union,” top auditor PwC said.

The rules are in response to a previous market study that found a lack of competition in the industry. The new rules are aimed at promoting more frequent auditor switching.

Full content: Accountancy Age

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