Statement on the Release of the Final Report from the UK Competition and Markets Authority

Washington, DC – The Center for Audit Quality issued the following statement in response to the release of the UK’s Competition and Markets Authority’s final report of its Statutory Audit Services Market Study:

“A strong system of financial reporting is vital to investor confidence and the effective functioning of our capital markets. In the United States, the enactment of the Sarbanes-Oxley Act of 2002 reinforced US corporate governance, mandated greater executive accountability for financial reports, established independent audit committees, enhanced auditor independence, and created a strong, independent regulator in the Public Company Accounting Oversight Board. The Act strengthened how companies, regulators, corporate directors, and the audit profession work together constructively and continually to build trust with the capital markets.

In tandem with the beneficial effects of the Sarbanes-Oxley Act, US auditing firms have made massive investments in systems of quality control, focusing on codes of conduct and partner assignment processes, technical support from firm national offices, internal inspections, innovative tools and technologies, and more. Taken together, our capital markets have enjoyed significant, demonstrable gains in audit quality, investor confidence, modernization of systems and technology platforms, and the reliability of financial reporting.

We recognize that other countries around the world have different regulatory, governance, and capital markets systems. For instance, while we support objectives to increase choice and competition in the UK audit market, we believe some of the reforms being proposed could lead to unintended consequences, with the potential risk of lower audit quality, damage to UK competitiveness, and reduced resilience of the audit sector. In addition, in today’s rapidly evolving global business environment, it is more important than ever that the full breadth and depth of audit firms’ subject-matter expertise, supported by the multidisciplinary business model, continue to serve as a crucial foundation for delivering the highest quality audits. These skills enable auditors to fully understand and evaluate the broad array of business risks necessary to execute high-quality audits that meet the needs of investors and strengthen confidence in our capital markets.

The US public company auditing profession—comprised of hundreds of public accounting firms of all sizes—embraces continuous improvement. We are proud of the results that this has yielded and will continue to yield into an exciting future, one in which technological advancements make auditing more important and valuable than ever to our stakeholders, including investors and the capital markets.”

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About the CAQ

The Center for Audit Quality (CAQ) is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high-quality performance by public company auditors; convenes and collaborates with other stakeholders to advance the discussion of critical issues that require action and intervention; and advocates policies and standards that promote public company auditors’ objectivity, effectiveness, and responsiveness to dynamic market conditions. Based in Washington, DC, the CAQ is affiliated with the American Institute of CPAs.

Contact
Andrew T. Gillies
Director of Communications
202-609-8048