Paul Boyle, the FRC’s chief executive, said he was ‘very grateful’ for all
the contributions and that he was looking forward to ‘hearing the views of
stakeholders’ at a FRC public meeting on 18 September.
But after working through the responses, and having watched the vicious
verbal scrap that erupted between shareholders and firms leading up to the FRC’s
formal announcement, Boyle could be forgiven for looking forward to next month’s
gathering with trepidation.
The desire to control debate on audit quality is strong. For all parties
there is much to lose and much to gain from its outcome. Boyle and the FRC are
going to have their hands full making sense of it all.
It was the response of the Association of British Insurers that kicked off
the fury in earnest. The ABI, whose 400 members account for a fifth of the
investments made on the London Stock Exchange, shocked the investment community
with the proposal that regulators should step in and force the Big Four to shed
clients if they became to dominant.
‘It should be clear to the large accounting firms that, if their share of the
market is deemed to be excessive, they will be obliged to divest part of their
business,’ the ABI said in its response document. The threat of action by the
competition authorities would provide a strong incentive to the development of
It didn’t take long for the Big Four to strike back.
Peter Wyman, head of professional affairs at PricewaterhouseCoopers, said the
ABI’s response was ‘brainless’ and ‘from a different planet’. Deloitte’s chief
executive John Connolly maintained that ‘artificial actions are not the answer’
and KPMG said forcing clients to drop a Big Four auditor ‘clearly contravened
And it wasn’t just the Big Four and ABI that were eyeballing each other. The
mid-tier firms also joined the debate. BDO Stoy Hayward said the Big Four had
used the threat of voluntary withdrawal from the audit market as a bargaining
tool to negotiate liability reform.
David Herbinet, head of public interest markets at Mazars, criticised the Big
Four for supporting regulation when it suited them, but fighting it when it
could have a negative impact on their businesses.
‘The Big Four support regulation such as proportionate liability, because it
suits them, but then shy away from market regulation when it does not,’ Herbinet
The lines have been drawn in the sand. The battle for control of the UK audit
market has officially begun.
The Financial Reporting Council has issued guidance regarding the annual reporting of 1,200 large and smaller listed companies. The letter highlighted the key issues and improvements that can be made in the 2016 reporting season
Baldwins Accountancy Group has continued investment in the north-east and appointed David Fish as a director in its corporate finance team
UK M&A activity bounced back strongly in July and August, according to analysis by the deals practice at PwC.
Smith & Williamson has added Jim Clark and Philip Marsden, of Marsden Clark Corporate Finance Limited, to its corporate finance team.