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.