The UK Competition Commission announced Friday that it will review its new audit market reform rules in order to consider the impact of an EU proposal that is close to being finalised.
The EU is in the final stages of approving a proposal that would require public-interest entities to rotate engagements with audit firms every 10 years, with provisions for longer periods when engagements are put out for bid or joint audits are performed. The EU reached preliminary agreement on the proposal in December.
In October, the Competition Commission announced rules that did not include a mandatory rotation requirement but would require FTSE 350 companies to put their statutory audit engagement out to tender at least every ten years.
According to a statement released Friday, the Competition Commission expects the EU proposals to be finalised and come into force in the second quarter of 2014. In the interest of consistency, the Competition Commission has changed its calendar, with the expectation of redrafting its rules in the second quarter of 2014, and finalising rules in the third quarter of this year.
The Competition Commission expects its rules to take effect in the fourth quarter of 2014.
“We are keen to follow the principles of better regulation, including by ensuring that our Orders do not contradict or duplicate EU regulation,” the Competition Commission said in a statement. “Therefore, in the light of these developments we have extended our administrative timetable to enable us to consider fully the implications of the EU proposals on our own Orders.”
Last year, the Competition Commission considered imposing its own mandatory audit firm rotation requirement, but decided to require retendering instead.
—Ken Tysiac (email@example.com) is a CGMA Magazine senior editor.