BRITAIN’S biggest companies should put their audit contracts out to tender at least once a decade, the Financial Reporting Council said as it set out a major overhaul of its guidance today.
The regulator also calls on boards to end the practice of trumpeting positive news in annual reports, while keeping other figures hidden among the details.
“These changes are something we have been thinking about since the financial crisis, about what contribution we can make to help improve things,” FRC chairman Baroness Hogg said.
“We have consulted widely on this and there was large support for re-tendering rather than mandatory rotation.
“The Europeans are talking about a mandatory rotation, but we think what we are proposing will make companies think about exactly what they are getting for their money.”
Authorities in Europe are considering new rules to force firms to switch auditor every 15 years.
Europe is also mulling a ban on auditors performing other services for their clients, but the FRC has stopped short of recommending this.
The Institute of Directors cheered the FRC’s tighter new rules.