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Donald Brydon, outgoing Chair of the London Stock
Exchange Group, appointed to lead new independent review of the
quality and effectiveness of the UK audit market
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High quality audit work is critical to financial
markets and the economy. This review will consider standards
being delivered by UK auditors and what more can be done to
make them more effective and reputable
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Review will consider what the standards and
requirements should be for the UK audit profession in the
future
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The Brydon Review into UK Audit
Standards comes as the CMA publishes its interim findings
on competition in the market and Sir John Kingman publishes his
proposals for replacing the FRC with a strengthened
watchdog
The Government will today (Tuesday 18 December) launch a new
independent review into standards in the UK audit market, with
the outgoing Chairman of the London Stock Exchange tasked with
recommending what more can be done to ensure audits meet public,
shareholder and investor expectations.
The review will be led by Donald Brydon, chairman of the Sage
Group, who has extensive experience within the finance and audit
sector and will be supported by an advisory board which he will
appoint.
The Brydon Review into UK Audit Standards will build on the
findings of two parallel reviews looking into: the independent
review by Sir John Kingman of the industry’s scrutiny body – the
Financial Reporting Council (FRC); and the Competition and Market
Authority’s (CMA) market study looking at the effectiveness of
competition in the audit market, both published today.
The CMA paper identified serious competition concerns in the
audit sector, as well as proposing changes to legislation to
improve the audit sector for the benefit of companies and
investors alike. It is now putting these proposals out for public
consultation. Meanwhile Sir John Kingman’s independent review has
recommended to Government that the FRC be replaced with a new
independent regulator with clear statutory powers and objectives.
Business Secretary said:
“The UK is rightly recognised internationally for our outstanding
business environment and responsible business practices, both of
which are fundamental reasons why we are one of the best places
in the world to work, invest and do business.
“I’m delighted that Donald Brydon will be leading this review,
following the important work of Sir John Kingman and the CMA, and
his work should help us improve and restore confidence in the
quality and rigour of audit companies.
“Audit companies need to learn the recent lessons from high
profile audit failures and reform to regain public confidence, or
they will be forced to do it.”
This new review, building on the work of the FRC and CMA reviews,
will now consider audits as a product and what the future,
standards and requirements should be for audits in the future. To
ensure the UK’s audit sector remains world leading by constantly
looking to upgrade standards, the Brydon Review into UK Audit
Standards will consider:
- · How far
audit can and should evolve to meet the needs of investors and
other stakeholders, putting the UK at the forefront;
- · How auditors
verify information they are signing off;
- · How to
manage any residual gap between what audit can and should
deliver; and
- · What are the
publics expectations from audit.
The new Review will also test the current model and ask
whether it can be made more effective as well as looking at how
audit should be developed to better serve the public interest in
the future, taking account of changing business models and new
technology.
The review is part of the Government’s modern Industrial Strategy
- a long term plan to build a Britain fit for the future through
a stronger, fairer economy.
It comes as part of a wider package of corporate governance
reforms recently introduced by the Government.
A detailed Terms of Reference and project plan will be published
in the New Year.
