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ICAEW calls on CMA for greater clarity on audit tendering requirements

The UK Competition and Markets Authority's (CMA) draft order for audit market remedies lacks clarification of the competitive tendering requirements, according to the Institute of Chartered Accountants in England and Wales (ICAEW).

ICAEW head of integrity & markets Tony Bromell said that the draft lacked clarity and logic for both businesses and audit firms.

"The CMA's more detailed explanatory notes to help clarify the competitive tendering requirements and in particular audit committee responsibilities are still too complex," he said. "Further clarification will be needed to help companies understand when they need to take action."

Bromell said a specific area the ICAEW hoped CMA would reconsider was when a UK company has to put ist audit contract out for tender.

"The CMA's guidance on the transitional arrangements suggests that companies that have changed auditors in the last 11 years will have to tender their audit contracts earlier than those who have not changed auditors that recently," Bromell said.

This is the result of the EU leaving some room for different interpretations, he explained. "But this interpretation is not logical and is the subject of much debate within Europe."

ICAEW comments came as a response to CMA's public consultation launched in July 2014 on the draft order The Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of competitive Tender Processes and Audit Committee Responsibilities) Order 2014.

The draft order once finalised will put into force some of the changes proposed by the Competition Commission's investigation into the UK statutory audit market. These include10 year mandatory audit retendering for the FTSE350 companies.

The consultation will run until the end of until August 2014. CMA expects the order to apply for financial years beginning on or after 1 January 2015.

Related articles

UK competition authority launches consultation on draft order for audit market remedies
Mandatory retendering every 10 years hits UK FTSE350

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