Adrian Stone, Head of Audit at KPMG in the UK, comments on the revisions to the Ethical Standards by the Financial Reporting Council, resulting following the implementation of EU Audit Reforms.
Commenting on the revisions to the Ethical Standards resulting from the implementation of EU Audit Reforms announced on 27 April by the Financial Reporting Council, Adrian Stone, Head of Audit at KPMG in the UK, said:
“It’s good to have the proposed UK rules as we approach 17 June, from when the EU Audit Reforms take effect. Whilst we will of course need to read through the detail of the hundreds of pages that make up the standards published by the FRC on how the UK will implement the European legislation, our first impression is that they are largely as expected and as have been discussed during the extensive consultation phase.
“There is no doubt that we are currently experiencing the most significant change our profession has ever seen as the market adapts to the introduction of mandatory audit firm rotation and further prohibitions and restrictions on non-audit services.
“The reforms have driven unprecedented levels of audit tendering activity which, in turn, has resulted in a vibrant market for audit and other professional services with a particular focus on audit quality and innovation and technology to enhance the audit process. This level of tendering activity is set to continue; we estimate that around half of the FTSE 350 will have tendered between October 2013 and the end of next year.
“Whilst it’s good to finally see the new standard I don’t think we yet have all of the answers. Firstly, there is a final piece of the regulatory jigsaw outstanding being the final rules on mandatory firm rotation from the Department of Business, Innovation and Skills. In addition, inevitably as we seek to implement the new standard we believe that there remain a number of areas where companies and audit firms will need greater clarity of understanding of the detailed provisions. We would hope to work with both ICAEW and the FRC over the coming months to clarify the position in these areas.”
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