Last summer, the audit market was stunned when Philip Broadley, chairman of
the Hundred Group of FDs, went against the consensus and voiced his support for
introducing joint audits in his response to the FRC’s consultation on audit
competition and choice.
The head of the influential finance director group was at it again last week
as the FRC published the responses to its latest round of consultation on audit
In a succinct but striking response to recommendations put forward by the
FRC’s Market Participants Group, the Hundred Group head said there was enough
choice available to large multinationals in the audit market and that there was
no need to incentivise other firms to challenge the Big Four at this stage.
‘The audit market that does exist is subject to a healthy degree of
competition based on audit tender activity and pricing. We do not believe that
the current amount of audit provider choice is so restrictive that it requires
other non-Big Four audit firms to be forced or unduly incentivised to compete in
this market,’ Broadley said in the FD body’s response.
The Hundred Group also slated proposals that the regulator should intervene
to enhance choice in the market.
‘We do not believe it is in the market’s interest to prevent a reduction in
audit choice at all costs. Equally, we do not believe that regulators should
precipitate such an event through disproportionate regulatory activity,’
Some of the other responses to the MPG recommendations were bland in
comparison. The large firms showed a willingness to increase the effectiveness
of the market, but defended their claim to the very large stake in the market,
by holding up the fact they had made large investments over the past 20 years to
More interesting was the ABI’s concern that if a giant firm collapsed,
refinancing would be very difficult because of the current restrictions on audit
‘Given the public policy concerns around the putative collapse of a Big Four
audit firm it should at least be incumbent on the FRC, as domestic regulator,
together with counterparts at European level, to give thought to this in order
that appropriate policy responses are capable of being implemented at some
future date,’ the ABI said.
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