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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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