The Financial Reporting Council (FRC) has today issued a discussion paper, 'Choice in the UK Audit Market'. This follows the publication on 12 April of the report of a study jointly commissioned by the FRC and the Department of Trade and Industry, 'Competition and choice in the UK audit market' and a stakeholder meeting held on 26 April at which the study was discussed.

The Discussion Paper describes the importance of audit to the UK economy. It summarises key features of the competitive environment in the audit market and discusses risks to the public interest that may arise from the level of choice in the market. It then goes on to consider three broad types of opportunities for mitigating any confirmed risks:

• To promote increased choice, such that there would be more audit firms participating in the market for audit of large public companies.
• To reduce the risk of an existing large firm leaving the market.
• To reduce the costs of disruption in the event of a large firm leaving the market.

Views on the discussion paper are invited by Friday 4 August. Following the consultation period, a stakeholder meeting will be held on 18 September at which general approaches to mitigating any agreed risks will be presented and discussed. Following that meeting, the FRC will prepare a paper seeking views on options for mitigating those risks that are considered to be most significant.

Chief Executive of the FRC, Paul Boyle, commented:

“We believe that the issues arising from the current competitive environment are potentially important. We are keen to hear the views of interested parties as we develop our thinking on these issues”.

1. The Financial Reporting Council (FRC) is the UK’s independent regulator for corporate reporting and governance. Its aim is to promote confidence in corporate reporting and governance.
2. From 1 April 2006, the FRC’s functions are the setting, monitoring and enforcing of accounting and auditing standards, setting actuarial standards, overseeing the regulatory activities of the accountancy and actuarial professions, statutory oversight and regulation of auditors, operating an independent investigation and discipline scheme for public interest cases, and promoting high standards of corporate governance.
3. These functions are delivered principally by its operating bodies - the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board, and the Accountancy Investigation and Discipline Board – and by the FRC Council.
4. Details of the study 'Competition and choice in the UK audit market' can be found at: http://www.frc.org.uk/press/pub1083.html.
5. All press enquiries should be directed to Paul George, telephone 020 7492 2340.