George raised the concerns over small firm audit quality in an interview with Accountancy Age, where he said that increasing regulation and complex accounting meant that small firms were struggling to maintain the same audit standards.

Peter Mitchell, chairman of the Society of Professional Accountants, said the POB should be 'mindful' of the types of audit work it referred to when suggesting a lowering of audit quality.

Mitchell said it was only in very specialist areas where there might be a concern about audit quality, such as the audits of businesses regulated by the Financial Services Authority, which had become very technical and were no longer financially attractive for smaller firms.

Jonathan Russell, president of the UK 200 Group, said that his organisation carried out audit quality assessments annually and had found no evidence of a decline in audit quality: 'In most cases we have found that the quality of a smaller firm's audit can actually be of a higher quality than that of a larger one.'

He argued against George's view that smaller firms needed to consolidate in order to maintain audit quality. 'Your basic audit is not going to be improved by increasing in size,' Russell said.