Some institutional investors have been calling for greater competition and choice in the audit market for years. So, has the House of Lords economic affairs committee report, Auditors: Market concentration and their role, raised hopes that change could finally be within sight? The report, issued at the end of March, made a number of recommendations, including calling for a detailed investigation into the audit market by the Office of Fair Trading (OFT) with a possible inquiry by the Competition Commission. It also recommended that FTSE 350 companies mandatorily tender their audit contract every five years, and that audit committees include detailed reasons for their choice of auditors in their report to shareholders and hold discussions with principal shareholders every five years. The Lords even called for the Financial Reporting Council (FRC) to amend its UK corporate governance and stewardship codes accordingly.
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