FRC warns that compulsory accountant switching could be damaging

The Financial Reporting Council (FRC) has warned that forcing companies to change their accountants every few years could damage the quality of financial reports.

Among several proposals to break up the power of the big four accounting firms (PwC, KPMG, Ernst & Young and Deloitte) is a measure that would have firms switch accountants regularly, to ensure that audits were done with fresh eyes so that auditors did not become complacent in pointing out problems. Such a move could mean that working relationships are also damaged.

Compulsory tendering is another measure on the table, which sees firms have to offer their contracts to a range of auditors at regular intervals to shake up what regulators see as "static" markets.

The EU is currently considering a law that would make accountant switching mandatory.