The Financial Reporting Council (FRC) has today published briefing papers for its second stakeholder meeting on Choice in the UK Audit Market to be held on 18 September. The documents can be viewed at http://www.frc.org.uk/about/auditchoice.cfm

The meeting will consider responses to the FRC’s Discussion Paper on Choice in the UK Audit Market and six tentative propositions about which the FRC will seek to test the extent of agreement amongst stakeholders. These propositions are attached to this Notice. The meeting will also provide an opportunity for stakeholders to comment on the next stage of the debate over Choice in the UK Audit Market.

FRC Chief Executive, Paul Boyle said:

“The responses to our Discussion Paper indicate that our stakeholders agree that choice in the UK audit market is an important issue. We are seeking to reach broadly-supported conclusions from this stage of the debate and agree on the next steps. We are looking forward to hearing the views of stakeholders at our public meeting on 18 September.”

1. 1. The Financial Reporting Council (FRC) is a unified, independent regulator. Its mission is to promote confidence in corporate reporting and governance.
2. The FRC incorporates six operating boards: the Accounting Standards Board, the Auditing Practices Board, the Financial Reporting Review Panel, the Accountancy Investigation and Discipline Board, the Professional Oversight Board and the Board for Actuarial Standards.
3. The FRC published its discussion paper, 'Choice in the UK Audit Market' in May. This followed 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.
4. The stakeholder meeting will be held on Monday 18 September at 4pm at the Royal Institute of British Architects, 66 Portland Place, London, W1B 1AD. The meeting is expected to finish by 6pm and will be followed by a reception. As space at this meeting is limited, those wishing to attend who have not already registered are asked to complete and return the booking form available at http://www.frc.org.uk/about/auditchoice.cfm.
5. All Press enquires should be directed to: Paul George, telephone 020 7492 2340 or Paul Boyle, telephone 020 7492 2390.
6. The propositions which will be tested for the extent of support are:

Proposition 1
There would be significant risks to the availability and quality of audits if one of the Big Four firms was to leave the market.

Proposition 2
These risks could be mitigated if there was:

• Increased choice of auditor for public interest entities
• Reduced risk of an existing firm leaving the market without good reason
• Reduced costs of uncertainty and disruption in the event of a firm leaving the market.

Proposition 3
No single measure can address all of the risks identified but a considerable number of possible steps have been suggested by stakeholders.

Proposition 4
Further work is now needed to develop and fully assess the range of possible steps to mitigate the risks identified.

Proposition 5
In developing and assessing possible steps, the priority should be on those steps that can be taken by market participants. Any regulatory actions need to be subject to a thorough Regulatory Impact Assessment.

Proposition 6
Debate on these propositions within the UK will make a useful contribution to the international debate on these risks.