Policy makers in Europe are not listening to businesses according to a recent Baker Tilly survey.
Around the world auditors and their regulators are all being called into question over the banking crisis. However, whilst it makes good headlines for the policy makers it is not necessarily good for companies.
The European Commission’s consultation paper - ‘The Future of Audit Policy’ includes a number of policy options:
1. The creation of ‘Audit only’ firms; companies not being able to access advice or other services from their auditors (including amongst others Corporate and Personal Tax, VAT, M&A, due-diligence, accounting services, management consultancy and corporate restructuring)
2. Companies having to have joint (or ‘shared’) audits involving two audit firms
3. Companies only being able to retain their auditors for 8 years after which they would have to have a 4 year ‘cooling off’ period before being able to reappoint them
4. Companies being unable to engage new auditors unless they have gone through a competitive tendering process.
Survey Results
In May, Baker Tilly, in conjunction with YouGov, asked a sample of UK Companies what they thought about some of these proposed policy options. Respondents were Board Level Managers or Directors from companies with Turnovers:
| £5-20m |
49% |
| £20-50m |
21% |
| £50m + |
31% |
-
| Reasons for answering YES |
| 81% |
I like dealing with someone who understands my business already |
| 70% |
It saves me time |
| 48% |
It saves me money |
| 6% |
Other |
"Tax and audit are closely linked – and it makes cost sense to connect the two. Other activities can be separated."
| Reasons for answering No* |
| 90% |
I prefer to keep audit services separate from other services |
| 20% |
It saves money if firms compete to provide services |
| 13% |
Other |
* Less than 50 respondents (30) answered 'no' to this question therefore
these responses cannot be considered statistically reliable
-
| Bad idea - "How could we prevent collusion?" |
| Bad idea - "A regular auditor can get to know and understand your business" |
| Bad idea - "two at the same time is a recipe for massive inflationary cost and a watering down of auditor accountability. Perhaps for quoted companies there ought to be regular rotation of say 5-7 years (companies to decide)". |