A written report providing the conclusions of the auditor selection procedure is now a legislative requirement for PIEs.
Making the recommendation to the board on the appointment, reappointment and removal of the statutory auditor has for many years been a fundamental audit committee responsibility. Nevertheless, the recent audit reforms introduce a number of legally binding requirements in relation to audit tendering and rotation that for some Public Interest Entity (PIE) audit committees will represent a significant change to their role.
Specifically, SI 2016 No. 649 ‘The Statutory Auditors and Third Country Auditors Regulations 2016’ requires that the audit committee be responsible for the auditor selection procedure and, by reference to the EC Audit Regulation, that (unless the company qualifies as a small or medium-sized company) the audit committee shall ensure that a report on the conclusions of the selection procedure is prepared and validated by the audit committee. Similar requirements exist for non-corporate PIEs governed by the FCA and/or PRA rules.