Mid-tier accounting firm Grant Thornton has described the current audit market as unsustainable and is calling for new rules to promote greater competition.

In a letter to the International Organization of Securities Commissions, the firm put together a four point plan aimed at increasing diversity in the concentrated audit industry.

The firm want regulators to require companies to disclose third party agreements that limit auditor choice, discourage companies and financial intermediaries from entering agreements containing restrictive clauses, and publish balanced findings of their inspections of individual audit firms

The firm claims that in the event of a Big Four collapse, 20% of the 7200 largest businesses in the G20 would be left stranded without an auditor.

Steve Maslin, who chairs the Partnership Oversight Board at Grant Thornton UK said there was growing concern among shareholder groups and capital markets “that the current excessive level of concentration is unsustainable and could threaten capital markets”.

The letter comes as the industry in the UK gears up for the release of the audit governance code, expected early next week. The code is expected to set up a structure for firms aimed at preventing a major collapse.

During consultation the code drew criticism from industry figures for including a requirement for non-executive directors. It was thought global firms would struggle to find suitable candidates which met the independence criteria.

It’s unclear what will be included in the final code.

Further reading: Wyman warns over non-exec restrictions