Major companies could escape “double check” audit

Owl has just one question – why?

“Britain’s competition watchdog is drawing up plans to exclude some major companies from a controversial new rule that would require many businesses to appoint joint auditors.

Sky News has learnt that the Competition and Markets Authority (CMA) has been weighing whether to offer an exemption as part of its heavily scrutinised inquiry into the audit market.

The CMA is expected to publish its final report this week, but has been stung by a backlash from corporate Britain to proposals outlined in December that would force FTSE-100 companies to employ two audit firms.

Sources close to the regulator’s probe say it has floated the idea of offering a “carve-out” from the joint audit rule for “the biggest, most complex companies”.

That could apply to banks such as HSBC Holdings and oil companies including BP and Royal Dutch Shell.

One insider said a crude market capitalisation threshold could apply, with companies worth more than a certain threshold allowed to continue with a single auditor.

The workability of this idea was dismissed by corporate chiefs, however, given the potential impact on companies crossing such a threshold in either direction or on multiple occasions.

It was unclear this weekend whether the exemption would be included in the CMA’s final report, although one source close to the government said the watchdog had appeared to be determined to press ahead with it several weeks ago.

The CMA is also expected to push for a more robust separation of the big four’s audit and non-audit practices than it floated in its preliminary report four months ago.

Its inquiry was launched at the behest of the Department for Business, Energy and Industrial Strategy (BEIS) in the wake of anger about the role of auditors in major corporate scandals at BHS and Carillion.

Accountants have also faced probes into their work on the books of companies such as BT Group, the Co-operative Bank, Ted Baker and Patisserie Holdings. …