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20 August 2014 | Will Green
The number of FTSE 350 firms carrying out audit tenders has almost doubled this year, according to PwC.
Following a snapshot survey in July PwC said 56 companies – or one in seven FTSE 350 firms – have carried out tenders, or intend to, in 2014, compared to 30 last year and 18 in 2012.
The increase follows a change in the Financial Reporting Council’s Corporate Governance Code in October 2012, which said firms should put audits out to tender every 10 years on a “comply or explain” basis.
Meanwhile, a new EU directive covering audits came into force in June, which requires firms to tender audits every 10 years and change supplier every 20 years. The UK has two years to incorporate the directive into domestic law.
At the same time, the Competition Commission, which has proposed similar requirements, is now considering its recommendations in light of the EU directive and is expected to respond later this year.
PwC said two out of three of the firms who put audits out to tender since October 2012 had switched suppliers.
James Chalmers, UK head of assurance at PwC said: “Tendering activity is at unprecedented levels. We expect between 50 and 60 FTSE 350 tenders in total this year, nearly double the number in 2013.
“Now that there is greater clarity on the implications of the EU rules, companies are able to make decisions on when to tender at a time that makes most sense for their particular circumstances. For some, that means going early, for others it means going later, but crucially the choice is still theirs to make.”