Mid-tier firms are cranking up the pressure for action to break the
stranglehold the Big Four has on large company audits, ahead of the publication
of new research on competition in the audit market.
Consultancy Oxera is due to hand over the findings of its study into the
competitiveness of the UK audit market to the Department of Trade and Industry
next month. It is hoped the report will suggest some solutions to the issue of
the Big Four’s current dominance of audit at the high-end.
But the second level of accounting firms, which have previously shown little
appetite to take on the Big Four, are starting to push change in order to
‘We need to be focusing on broadening the number of people who are auditing
the FTSE350 companies and the companies immediately outside that,’ said BDO Stoy
Hayward managing partner Jeremy Newman. ‘We want to raise the awareness of
investors, audit committees or otherwise that we are willing and able to do that
Newman is hoping that the report will provide some useful ideas, but admits
that the task of creating greater competition is tough.
‘We do now have a Big Four, they do have a virtual monopoly over the FTSE100
and they do monopolise the FTSE350,’ he said.
The firms had a ‘presence in the hearts and minds’ of many in business, with
‘an overwhelming percentage’ of those involved in the decision to appoint an
auditor being alumni of the Big Four, he said.
RSM Robson Rhodes senior partner Chris Connor has suggested that companies
should be ‘actively encouraged’ by shareholders to include firms outside the Big
Four on tender lists.
In a letter to Accountancy Age, Grant Thornton chief executive Michael Cleary
said that the ‘biggest problem’ lies among those quoted companies below the
‘Addressing this over the next few years would not only increase choice for
the majority of UK public companies, and thereby increase audit quality, but it
might also provide a platform in future from which the Big Four stranglehold on
the very largest companies might be attacked.’
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