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UK Gov. launches new review into audit profession

Donald Brydon, the outgoing chair of the London Stock Exchange Group, has been appointed to lead a new independent review of the quality and effectiveness of the UK audit market, the so-called ‘Brydon Review’.

The independent review was launched the same day the Kingman Review published its findings that the Financial Reporting Council should be replaced with a new regulator, and the Competition & Markets Authority (CMA) released an update on its study into auditing, which including (among other things) a proposal to break up audit and advisory practises.

According to the Government, the new review will build on the findings of these two reports.

Initially the review will consider audits as a product and what the future, standards and requirements should be for audits in the future. This will include a look at the expectation gap, something auditors have long pointed to when discussing corporate failures.

Specifically, it will look at:

  • How far audit can and should evolve to meet the needs of investors and other stakeholders, putting the UK at the forefront;
  • How auditors verify information they are signing off;
  • How to manage any residual gap between what audit can and should deliver; and
  • What are the public’s expectations from audit.

Business secretary Greg Clark said:  “The UK is rightly recognised internationally for our outstanding business environment and responsible business practices, both of which are fundamental reasons why we are one of the best places in the world to work, invest and do business.

“I’m delighted that Donald Brydon will be leading this review, following the important work of Sir John Kingman and the CMA, and his work should help us improve and restore confidence in the quality and rigour of audit companies.

“Audit companies need to learn the recent lessons from high profile audit failures and reform to regain public confidence, or they will be forced to do it.”

A detailed terms of reference and project plan will be published in the new year.

 

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