The UK Government’s Business, Energy and Industrial Strategy Committee (BEIS Committee) has questioned the Big Four over how much they spend on hospitality for prospective clients.
In a letter sent to all of the Big Four, BEIS Committee chair Rachel Reeves asked the firms to detail their overall spend on FTSE 350 client hospitality, entertainment provided to audit clients and how many events of this kind were held over the last five years.
She also asked how much was spent on non-audit clients which subsequently became audit clients.
Alongside this information, Reeves asked for information regarding how audit staff remuneration and progression is affected by audit quality issues and the targets that are set for senior audit managers to progress to audit partner level.
An EY spokesperson said: “EY is committed to taking an active part in all current reviews into the audit market and will continue to respond to information requests from the BEIS select committee.”
This is just one of many investigations focussing on the audit market currently taking place in the UK. The Competition and Markets Authority (CMA) published its initial review on competition in the FTSE 350 audit market at the end of last year, as did the Kingman Review which has called for the UK’s Financial Reporting Council to be replaced.
At the end of last year, The Brydon Review was also launched and is focussing on the so-called expectation gap of audit and to see if current audit standards are still fit for purpose for 21st century business models.
The reviews were launched following a number of high profile company failures over the last couple of years which has brought the role of auditors to the attention of the general public.