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Radical reform of external audit market fundamental to reducing risk of future Carillions

The Chartered Institute of Internal Auditors has today broadly welcomed new proposals from the Competition and Markets Authority (CMA) to reform the external audit market and reduce the risk of further Carillion-style corporate collapses. 

The CMA’s proposals include the separation of audit from non-audit services such as consulting, something which the Chartered IIA has repeatedly called for.

Dr Ian Peters MBE, Chief Executive of the Chartered Institute of Internal Auditors said

“We welcome the proposal to separate external audit from non-audit services to raise standards, eliminate potential conflicts of interest and ensure the independence of external auditors to reduce the risk of another Carillion style collapse.

“We are unconvinced about the CMA’s proposal for joint audits which risk becoming burdensome for business and there are big unanswered questions about how they would work. A joint audit is a sledgehammer to crack a nut and there are better ways to raise external audit standards.”