Frances Ball 26 Nov 2019 12:18pm

Conservatives would scrap CMA joint audit proposals

If the Conservative Party were to win the 12 December election, they would scrap the suggested system of joint audits proposed by the Competition and Markets Authority (CMA)

Sky News reports that the Department for Business, Energy and Industrial Strategy (BEIS) has privately conceded that joint audits are unlikely to be introduced as one of reforms to audit

Joint audit, proposed by the CMA in April, would see a second firm other than one of the Big Four have collective responsibility for oversight of the largest companies’ accounts.

Instead, BEIS has suggested shared audit: in which the smaller firm would audit one division, or a subsidiary, of a given large company.

Although the CMA emphasised the need to open a market dominated by the Big Four, some smaller accountancy firms have questioned the viability of its reforms. Some suggest that joint audits could expose them to legal action over audit failure.

The Conservative manifesto alluded to audit reform but made few specific details, while Labour has taken another direction and proposed reforms that exceed the CMA’s recommendations.