FRC response to Competition Commission's proposed remedies

22 July 2013

The FRC appreciates that the Competition Commission has removed the proposed requirement for mandatory auditor rotation. However, the FRC has concerns over a number of its other proposed measures and the related costs.

The FRC has previously urged the Commission to respect the 10-year audit tendering cycle introduced to the Corporate Governance Code in 2012 and to give that timeframe the opportunity to prove itself. The Commission’s proposed five-year cycle for tendering also removes ‘comply or explain’ in this respect, which is a central tenet of the UK Corporate Governance Code.

The FRC will consider the proposal to increase the volume of audit inspections and reporting carried out by the FRC, particularly in view of extensions to the FRC´s inspection work being proposed at European level. The FRC will also take into account the balance of costs to shareholders as well as any potential benefits and how this would impact the FRC´s risk based approach.

Press release

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