The UK government has rejected some of the key
proposals in the House of Lords Economics Affairs Committee report
on the audit market and, in doing so, maintained its current policy
on the industry.

The government rejected legislating to enhance
dialogue between auditors and regulators; blaming IFRS for a loss
of auditor prudence; and the mandatory retendering of FTSE350
companies every five years.

The government does not believe the Big Four
are too big to fail and support the OFT’s investigation into
competition issues.

“The government will explore with the audit
profession issues around contingency planning, including whether
the major firms should have living wills,” the government said.

The government agreed with the committee that
joint audits were costly and inefficient way of addressing
concentration and rejected a ban for external auditors from
providing advice to the risk committee.

The government confirmed it is looking into
privatising public sector work that was previously carried out by
the Audit Commission.