Retendering and rotation of auditors helps improve audit confidence, according to the UK Financial Reporting Council (FRC).
The UK FRC has published its notes on best practice which highlight how audit committees can approach the process to get the best outcome. The best practices are based on the experiences of audit tenders since it has become a mandatory requirement in the UK in 2012.
The UK FRC compiled the guidelines following a number of roundtables it held with audit committee chairs that had recently gone through an audit tender process or were about to do so, also attending were investors and senior audit engagement partners from the larger audit firms.
Melanie McLaren, executive director, Audit and Actuarial Regulation at the FRC, said: “In the UK, and now across Europe, testing the market for audit on a regular basis is required. Even if the current firm is reappointed, the experience of the tender process can reinvigorate the audit approach.”