New independent research from leading recruitment specialist Robert Half reveals that nearly nine in 10 (87%) UK CFOs support the frequent rotation of company auditors, an approach proposed by the European Commission’s green paper on audit, which could also result in the evolution of audit-only firms.

The European Union’s proposals are aimed at addressing criticism that, before the financial crisis in 2008, there were industry-wide problems that led to auditors ignoring mounting risks at banks and other financial services firms. Criticism includes claims that audit firms have, and continue to provide a wide range of financial services to their clients, which gives them an incentive not to harm the overall relationship with a hard-hitting audit. There are also concerns that relationships could become entrenched over many years.

Robert Half’s survey of CFOs reveals that more than half (56%) believe auditors should be rotated at least every four years, with nearly four in 10 (38%) thinking they should be changed at least every three years. Large and publicly listed companies are most in favour of changing auditor this regularly. This is a far quicker rotation than the enforced nine year service limit being mooted by the European Commission.

However, whilst CFOs are largely supportive of mandatory rotation of company auditors, they do not think that the ‘Big Four’ auditing firms wield undue influence on the market. Seven in 10 CFOs questioned reject the suggestion that these companies prevent a competitive market. Perhaps unsurprisingly, CFOs of public sector organisations are the most concerned (80%) about the influence of the big four, compared to just 60% of private sector firms.

Ashley Whipman, Director, Robert Half Management Resources (UK) said, “While the majority of UK CFOs appear supportive of the European Commission’s proposal for the frequent rotation of company auditors, they disagree that the Big Four auditing firms wield undue influence in terms of pricing. It appears CFOs are happy to maintain the status quo Big Four of Deloitte, PwC, Ernst & Young, and KPMG, though they would like to see a far more regular rotation between these big players to ensure effective corporate governance.”

While CFOs are not unduly concerned by the influence of the Big Four, only around half of them (52%) currently pass on the details of auditor feedback to other areas of the business to improve corporate governance.

Ashley Whipman concludes, “It’s appears that two thirds (66%) of CFOs are currently not using their audit firm for consultancy or other non-audit work and are instead turning to other specialist firms to support them on specific projects. Indeed, we’ve seen a significant increase in demand from CFOs looking for highly skilled and experienced finance professionals who are able to lead teams on an interim or project basis. These individuals offer a cost-effective alternative and enable the CFO to keep a much closer watch on the direction and outcome of a project.”