Global audit industry is unsustainable: GT
Grant Thornton said regulators need to promote competition
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
