The Uk Competition And Markets Authority ( Cma ) Implemented A Compulsory Order

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Competitive Tendering and Audit Quality
The UK Competition and Markets Authority(CMA) implemented a compulsory Order in September 2014 for the purpose of improving audit independence. This essay will discuss whether the order will improve audit quality by answering several questions from two perspectives, academic research and auditing theory. The questions include the meaning of ‘audit quality ', opinions for and against mandatory rotation, the advantages and disadvantages of competitive tendering. The CMA 's viewpoint will also be discussed.

In latest years, some orders were issued by the Financial Reporting Council (The Audit Quality Framework, 2008), the International Auditing and Assurance Standards Board (A Framework for Audit Quality, 2014) and the European Commission (Green Paper, 2010) to improve audit quality, as a result of the financial crisis. Moreover, on 16th June 2014, the new edited European Audit Directive and Regulation came into force. These contemporary developments come into a conclusion, which is the concept of audit quality is very important. Interestingly, none of the FRC, IAASB framework and EU Green Paper define audit quality. It seems that audit quality is difficult to define because it is a changing and dynamic concept as audit practices evolve. However, De Angelo(1981) stated that ‘(audit quality is) the market assessed joint probability that a given auditor will both discover a breach in a client 's accounting system, and report the breach '.…

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