The following provides some suggestions of how corporate governance practices could be improved around the globe.
United Kingdom

The Financial Reporting Council (FRC) in the United Kingdom has recommended reforms in auditing that include:
• a greater communication role for audit committees enabling them to provide fuller reports to shareholders.
• disclosure of fees for non-audit services provided by the auditor in the financial reports, enabling ‘investors to decide … whether the auditor's objectivity and independence may have been adversely affected …’ (Hodge et al., 2012, p. 1)
The dominance of the Big-4 in providing audit services is being investigated by the UK Competition Commission (p. 2).
United States
The Public Company Accounting Oversight Board (PCAOB) issued concept releases and proposals to allow discussion ‘about potential changes to certain fundamental aspects of auditing’ (Hodge et al., 2012, p. 2). Areas include ‘the auditor report, audit transparency, and auditor independence, objectivity, and scepticism’ (p. 2). In addition, the vexed question of auditor firm rotation has been debated. (See Pozen, 2012, for a summary of the points raised in the debate, with his suggested solution to the rotation issue.)
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Reform has been proposed for the audit report with changes being considered in the following area. Included in the report will be a section devoted to auditor discussion and analysis, expanded use of emphasis paragraphs, auditor assurance on other information outside the financial statements, and clarification of language in the standard auditor (report) (p. 1).
Europe
On 30 November 2011, the European Commission (EC) ‘published proposals that would bring major changes to the audit market if adopted’ (p. 1). The reforms proposed include:
• mandatory rotation of auditing firms
• mandatory tendering of auditors
• prohibition of large firms providing non-audit services to clients (Curry, 2012, pp. 1, 2)
Proposals have also been introduced to promote ‘healthy competition in the audit market’ (p. 2).
The proposals include:
• prohibition on contractual clauses limiting the choice of the auditor to one of the large audit
firms (p. 1)
• allowing firms to exercise their profession across Europe (p. 2).
Australia
In Australia, the ASIC is also concerned about competition in the audit market. Doug Niven, Senior Executive Leader of Financial Reporting and Audit at ASIC, stated, ‘(W)e want to see the mid-tier grow and be credible competitors to the big four. Also, there has to be sufficient competition right throughout’ (King, 2012, p. 48).
The reasons for the wish to see increased competition are not stated. It is hoped the desire for increased competition is seen as a means of increasing audit quality and does not lead to competition in the price of the audit as happened in Australia in the 1980s and early 1990s.

Required
Discuss the impact of each of the above proposed changes on the discipline of auditing.

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