In its response to the Independent Review of the Financial Reporting Council (FRC) led by Sir John Kingman, Mazars says it strongly supports moving forward on audit reform as a matter of priority and that it also supports legislation being brought forward as a matter of priority to implement the recommendations of the CMA review on the audit market for PIEs and on setting up a new regulator to replace the FRC. Furthermore, the firm says it agrees with Sir Donald Brydon that such legislation need not wait on the outcome of the Brydon Review.
Among Mazars’ comments, the firm has suggested the new regulator be named the Corporate Governance Authority since corporate reporting and auditing are integral aspects of corporate governance. The firm says the new authority should respond robustly where it identifies reckless or wilful misconduct but equally believes it should not measures its success by the number or level of fines it levies but by the overall quality of corporate governance practice in its marketplace.
Alongside its response to Kingman, Mazars has also responded to Sir Donald Brydon’s Independent Review into the Quality and Effectiveness of Audit. To Brydon, Mazars has called for a new qualification of Chartered Auditor to be established, suggesting that this could either replace the title Registered Auditor or be a new title for a senior group of registered auditors.
Mazars said: “Consideration should be given to establishing a Society of Chartered Auditors under the auspices of the main professional bodies currently able to grant Registered Audit status. Such a body would enable auditors to speak with a single authoritative voice.”
Mazars also called for an independent review body to be established, ‘to keep issues under review related to the scope of audit and to trust in auditors. The body should be demonstrably independent of the firms and the relevant professional bodies but would naturally involve auditors in its deliberations. It could form part of, or at least feed into the proposed new regulator’.