Fears that opening up the audit profession to outside investment will compromise independence have been downplayed in an EU-commissioned study on audit firm ownership.

In its report on audit firm ownership, research consultancy Oxera told the EU that current ownership rules, blocking non-accountants from investing in audit firms, raise the cost of capital for these firms by up to 10%.

Oxera found that opening the profession up to outward investment would reduce this cost and could be managed in a way that prevented any conflicts of interest.

'A closer look at the decision-making processes within audit firms indicates that alternative ownership and management structures, where the control of audit firms is with external investors, are unlikely to significantly impair auditor independence in practice,' Oxera said in its report.

The findings of the study could pave the way for the EU to remove ownership restrictions and open up the audit profession to billions of pounds of outside investment.

Some senior figures, however, are sceptical about the impact that outside finance will have on the profession.

Sir Mike Rake, the highly respected former chief executive of KPMG and now chairman of BT, has said outside funding is not the panacea for concerns about competition and choice in the audit market. Rake has argued that building international networks and integrating practices is far more important and will take 10 to 15 years to achieve.

Further reading:

See the full EU Oxera report here

Oxera backs reform of audit ownership rules