August is dubbed as the silly season in the media due to a general lack of newsworthy events during the summer break in the Northern hemisphere.
Typically in the silly season journalists struggle to fill magazine pages and daily news bulletins and, as the journalists struggle, public relations teams often grasp the opportunity to promote their various causes by creating a bit of news of their own.
But sometimes this news creation falls flat, with some press releases landing in our inbox not only being far from informative, but also downright amusing.
One of my personal favourites this August was about a UK accountant and firm leader celebrating his 50th wedding anniversary. Much as you may be eager to learn the lucky fellow’s secret for a long and happy marriage we’ve decided to spare you a detailed read.
In any case, at the International Accounting Bulletin we’ve been unusually busy this month with several important developments across the industry.
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By GlobalDataThe UK statutory audit market concentration investigation appears to be finally drawing to an end with the Competition Commission (CC) looking to settle on five-year mandatory retendering for FTSE 350 companies and scraping the idea of mandatory rotation (see page 4).
Unsurprisingly, most stakeholders spent the first days of August preparing their response to the CC, which is issuing its final decision and report in the autumn.
Most responses seen so far have shown disagreement with the CC going against what the Financial Reporting Council (FRC) introduced only last year (retendering every 10 years on a comply or explain basis).
Some of the firms and the FRC have warned of the increased costs for companies and the danger of the remedy doing less good to audit quality than hoped. What the CC will do with those comments remains to be seen, but increased audit retendering is here to stay in the UK, be it every five, eight or ten years.
The CC’s rejection of mandatory audit firm rotation as a viable remedy for the UK market came only days after the US Congress put a stop on the US Public Company Accounting Oversight Board from further investigating the benefits of introducing rotation.
This means two of the largest professional services markets have rejected such a remedy, which will probably influence the decision at EU level.
There’s been little information coming out of the European Council on the matter during the Lithuanian presidency so far, but it’s the summer and most politicians are reposing on the Mediterranean coastline.
If there’s a general lack of compromise during the Lithuanian presidency the document and debate will move to the Greek presidency, which is likely to have a long list of other issues to keep the politicians busy.
Speaking of long-awaited legislation, India’s parliament has finally passed the Companies Bill, which now only awaits the presidential seal of approval.
In the pipeline for almost a decade, the Bill will overhaul some aspects of the industry with ten-year mandatory rotation of firms, the imposition of CSR requirements and the setting up of an auditor oversight body (see page 6 to 10).
The requirements are likely to pose some challenges for the industry, which is also battling economic slowdown in the country. However, for many, the recent development ends years of uncertainty over upcoming regulation and signals a new start in seeking out opportunities.
Similarly, elsewhere where market changes are looming, clarity is needed, and as the CC signs off on its final report and the EU legislative jalopy shifts up a few gears the industry can hopefully start work on implementing the long-debated changes and consequently improve the profession.
