KPMG proposes greater file access in auditor changes

News Article - Friday, September 08, 2006

filed under: Regulatory

New auditors should be given access to their predecessor's files, KPMG has suggested as part of a major Financial Reporting Council (FRC) review of the audit market.

KPMG noted that the steep learning curve faced by new auditors is one of the key variables which makes it difficult and expensive to switch provider.

The proposal will be debated when the FRC next meets on September 18th. The idea is not a completely radical suggestion and such access is given when an auditor resigns.

"It is also done during mergers and acquisitions, as part of due diligence for the auditor of the acquiring company," Richard Bennison of KPMG told Financial Director.

"Our suggestion is made so that the knowledge of incoming auditors is improved, which would also decrease the cost of transition of one firm to another, and we don't need a legal framework to do that," he added.

Other big four firms have not backed the idea however, with Ernst and Young stating that changes to file access would have a "limited impact" on choice.

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