Here are some points based on extracts from articles in the accounting press:
• The UK’s reporting regulator wants greater power to sanction and discipline audit firms.
• The Financial Reporting Council is pushing for ‘a wider range of sanctions to address shortcomings in audit quality’.
• The regulator is suggesting licensing auditors of large ‘public interest’ companies.
• The role of the auditor needs to be reconsidered in the modern business world as the growth of corporate governance has raised expectations of increased disclosure and transparency and auditors should encourage clients to go beyond statutory disclosure.

Required:
(a) Briefly explain how the auditing profession is currently regulated.
(b) Why do you think a financial or economic crisis raises questions over the role of audit?
(c) Some of the demand for increased regulation has come from audit firms themselves, particularly medium- sized firms that find it difficult to secure audit contracts for public limited companies (plcs) given the predominance of the ‘Big 4’ firms. One medium-sized firm has written to the House of Lords inquiry asking for a cap on the number of big audit contracts any one firm can have. Do you think that this is necessary and what impact do you think this would have on audit quality?
(d) Set out the arguments for and against giving the FRC a greater role in regulating audit firms.