The National Association of Pension Funds, which represents around £600bn of assets, has backed calls from Morley Fund Management for the commission to investigate whether there is enough competition in the market.
Hermes Investment Management and the Association of British Insurers have also expressed serious concerns over the competitiveness of the market for audit.
In its submission to the Department of Trade and Industry, NAPF said it believed that ‘the way to encourage competition is by a thorough study of the issues by the Competition Commission’.
It said there was a perception that companies requiring global services saw little choice but to go to the Big Four, despite these firms being ‘largely alliances between very large national firms in different countries acting under a common brand’. NAPF also argued that the recent Parmalat scandal demonstrated how fragile these arrangements can be.
The ABI, whose members manage around £1,100bn of funds, said it doubted whether reform of section 310 of the Companies Act 1985 ‘would be likely to enhance competition in the market for audit services’.
Hermes, which manages investments worth £45bn, said the government may conclude that ‘the market is currently so dominated by the Big Four, that the only solution may be more drastic changes to the audit market’.
All were against the proposal to introduce a liability cap in the companies bill currently passing through parliament. But they were open to the idea of proportionate liability, a course of action strongly recommended by former ICAEW president Peter Wyman, but not being considered for inclusion in the bill.
‘It seems that in pushing for a liability cap, auditors have opened Pandora’s box,’ said one investor. ‘The arguments they presented were so weak and unconvincing that they could well end up in a worse situation than they started with.’
In other responses to the consultation, ICAS backed calls from the ICAEW for the government to look at proportionate liability and introduce a cap as an interim solution, set as a multiple of the audit fee.
ACCA argued that the consultation failed to address the problems that face auditors. Chief executive Allen Blewitt argued that proportionate liability was the way forward, and said ?it is most regrettable that the government has excluded proportionate liability from the scope of the consultation?.
UK senior partner Phil Verity has been elected for a second term at Mazars
An audit partner has been appointed at Grant Thornton in its North West offices
KPMG has been appointed with “immediate” effect as the auditor of Dorcaster
The audit for Ibstock will be taken over by Deloitte following a competitive tender process