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February 7, 2011

EC AUDIT REFORM: Audit community backs mandatory retendering

Most audit market participants oppose joint audits as means of tackling audit market concentration but mandatory retendering has received some support.

A majority of respondents to an EC green paper on audit reform believe joint audits could decrease audit quality, increase costs and expose differences in audit approaches that could confuse auditor responsibilities.

The mid-tier are the only group of respondents to back joint audits and say the approach has worked well in France in lowering market concentration. The mid-tier believes joint audits would give firms an opportunity to prove to larger clients that their audit quality is up to scratch.

Open to retendering

Respondents have also said they would be open to the idea of mandatory retendering on a regular basis.

Public authorities, preparers, businesses and organisations of companies said the selection criteria should be defined ahead of the tendering process in order to justify the decision, and this process should be communicated to ensure potential candidates are not discriminated against. 

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