Allen Blewitt has warned that smaller audit firms will not be able to compete with large firms as over-regulation of the auditing profession and global corporate scandals costs the industry most of its members by 2013.

Blewitt, ACCA's chief executive officer, told attendees at a South African ACCA gathering that only the Big Four will be viable in the next several years, according to Business Day in South Africa.

'The sheer number of audits is dropping. Legislators do not understand the auditing profession. When they regulate the profession, all they see is red tape.
'The regulators have a blinkered view of audit,' Blewitt said.

'If I had to complain to the regulators, they would simply turn around and say it was a matter of self-interest,' said Blewitt.

Blewitt later clarified his remarks, telling Accountancy Age that he did not believe only four firms would be able to survive: 'The number of small and medium-sized companies needing audits is diminishing because legislators across the world are increasing the statutory audit threshold. Governments wrongly see audit as merely a compliance cost, and appear determined to free up as many SMEs as possible from this requirement.

'ACCA strongly believes audit is a useful and value-added management discipline for companies and a fair ‘quid pro quo’ for companies enjoying the benefits of limited liability.

'It is the rise in audit threshold – a supposed deregulatory initiative – which is driving this situation rather than over-regulation caused by corporate scandals.'

Further reading:

Auditing Braces Itself for Exodus