Britain consults on EU company accounting reforms
A public consultation has begun in the UK regarding sweeping new European Union reforms of company accounting, which are due to come into effect in June 2016.
The EU rules will see the Financial Reporting Council (FRC) take responsibility for the supervision of 50 accounting firms and include requirements for companies to replace their auditor at least every 20 years.
Companies are expected to consider changing their accountants every decade already in the UK, but the EU wants to see more competition in the accountancy sector.
FRC executive director of codes and standards Melanie McLaren said: "The most instant change is that things we have developed as best practice will be a matter of legal requirement, such as re-tendering of auditors."
"There is no indication that those outside the Big Four are picking up audits in connection with the FTSE350 companies," McLaren added.
The new EU law followed concern that accountants gave banks a clean bill of health in the run up to the 2007-09 financial crisis.
The full implications of the implementation of the law has still not been addressed by some companies, according to E&Y's UK head of audit, Hywel Ball.
"The other big change worth noting now is that more entities than ever before, especially in the financial services sector, will have to establish audit committees," Ball said.
"Many entities, ranging from companies to financial institutions, will need to think about how and where they are going to find the non-executive directors to take up these roles across an increasing number of audit committees," Ball concluded.