Like an audit report itself, there are few bold pronouncements in this week’s update from the FRC boilerplate announcements are more the order of the day. Of the 15 proposals made in the FRC’s interim report, just three were subject to alteration in this week’s final version. Two of those simply served to tie down detail; only one contained a material difference, and even that had been foreshadowed by the Audit Quality Forum’s forays into the area.
What we’re left with is a package of measures that individually will do little to widen the audit market. The FRC will be hoping that, together, the whole adds up to more than the sum of its parts.
Should we have expected more? Perhaps not. Accountancy Age has long struggled to see how choice can be widened through regulation. And while the market may be concerned about the lack of choice, there is little anger.
So where do we go from here? Well, the report may spur the Big Four into a degree of action. FRC chief executive Paul Boyle has thrown his weight behind the market so far but earlier this year warned the FRC would review its position if market-based solutions were not effective. The big firms will not want it to come to that.
But, so far at least, the market has shown little appetite to act. FTSE 350 companies, the big pension funds and fund managers continue to appoint the Big Four as auditors.
Will the effect of the report be as modest as the changes it puts forward?
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