Audit 'needs' intervention
Grant Thornton has not held back. In response to a House of Lord inquiry it has let the regulator and Big Four have it with both barrels.
When it comes to the audit market for publicly quoted companies the Big Four still dominate and the Financial Reporting Council has failed to change things despite recognising the risk.
Grant Thornton now wants action. First, a cap on how much of the audit market a firm can have and a block on banks writing restrictive clauses into their credit agreements which insist on a Big Four auditor.
GT’s point is that the softly softly approach has singularly failed to work.
The evidence is there. The Big Four still dominates the listed company audit market and, while the FRC may think there is only anecdotal proof of restrictive clauses, auditors are quite certain of their existence.
On the other hand Deloitte has argued to the House of Lords that there is fierce competition in the audit market. Frankly, that’s likely, but only in a narrow sense. The stats don’t seem to bear that out. Though you can interpret those in a number of ways.
the question is really one about what the audit market should. It looks too concentrated at the moment, so what do we do about it? Well, the first strategy didn’t work. Grant Thornton have a case that the options are running out. And fast.