US Treasury to investigate audit market

Former SEC chairman Arthur Levitt to examine whether four big firms are enough

Written by Gavin Hinks

Accountancy Age, 18 May 2007

In a move which mirrors work currently underway here in the UK, the US Treasury has announced a review of the US audit market.

The move is tacit acknowledgement that the US government no longer sees the current market of just four global audit firms as sustainable.

In an article in the Financial Times today, US Treasury secretary Henry Paulson writes that the collapse of Andersen as a result of the Enron crisis has raised 'legitimate questions about the sustainability of the auditing profession's business model'.

He has asked the former Securities & Exchange Commission chairman Arthur Levitt, and Donald Nicolaisen, former SEC chief accountant, to co-chair a committee to addess 'auditing industry concentration'.

It was only at the beginning of this month that Christopher Cox, the current chairman of the SEC, visited London and pointly supported the work of the FRC on improving audit choice in the UK.

‘The SEC is very impressed with the market participants group interim report, particularly its focus on contingency planning in the event of a large firm leaving the market,’ Cox said, while sharing a platform with the FRC’s Paul Boyle.