In its response to the White Paper on ‘Restoring trust in audit and corporate governance’, the Institute of Directors has called on the Government to:
- Take time to assess the viability of managed shared audits before widely implementing them
- Create a professional framework for directors
- Ensure that ARGA does not lead to the creation of a prudential regulatory regime
The IoD supports the Government’s desire to reduce concentration in the audit market, but is concerned about the viability of the concept of ‘managed shared audits’ – where FTSE 350 firms would be required to appoint a challenger audit firm to conduct a meaningful proportion of the statutory audit (typically 10-30%).
The IoD is calling on the proposed new regulator, ARGA, to oversee a period of evaluation in which the capacity and willingness of challenger and Big 4 audit firms to work together through managed shared audit is assessed and clarified, with any issues ironed out before extending to the rest of the FTSE 350.