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Mandatory firm rotation (MFR) audit rules have had “very little” impact, don’t create more competition between audit firms and instead increase concentration in the market, says Mazars’ UK head of PIE and global head of audit, David Herbinet. MFR was brought in by the Financial Reporting Council (FRC) in October 2012, requiring firms in the FTSE 350 to put their audit out to tender every 10 years. “There has been very little impact,” says Herbinet. “If anything, there is increased concentration, as opposed to less. “What mandatory firm rotation has actually achieved is that where the non-Big Four firms had clients in these markets, they’ve been forced to lose them. So, if you’re not winning new ones and you lose your existing ones, it can only lead to increased concentration,” he adds. ....
Challenger audit firms prep for forced audit separation Challenger audit firms are readying themselves for audit separation, a requirement not yet expected of them, but one they see as inevitable in the future. Last summer audit regulator the Financial Reporting Council (FRC) ordered the Big Four firms – Deloitte, KPMG, PwC and EY – to separate their audit units from the rest of their business by 2024, in what would be a “major step in the reform of the audit sector”, according to the watchdog’s chief Sir Jon Thompson. Although audit separation was targeted at the Big Four, challenger firms BDO, Grant Thornton and RSM have confirmed they have been working behind the scenes on what audit separation would look like for them, on the assumption they will have to follow suit in the future. ....
Regulators remind auditors to pay attention to Covid measures on corporate reporting Despite the Covid-19 pandemic the City is still buzzing with hiring activity. just via Zoom and MS Teams The FCA and the FRC have issued a joint statement to remind auditors of the coronavirus-led rule changes around corporate reporting for listed companies. Now is the busiest time for auditors, when, under normal circumstances, many listed companies would publish their end of year results. But 2021 is proving especially challenging for auditors, with England’s third national lockdown getting in the way of auditors being able to practically complete audits. ....
The timing of England’s third national lockdown has posed new and more difficult challenges for audit firms to overcome, that could see annual results delayed or even qualified. ....