PracticeAuditInvestors fire warning shot on competition report

Investors fire warning shot on competition report

Auditors told competition report is no excuse for more liability protection

competition report

Investors have warned the profession not to use the government’s report on
audit competition as an excuse to drive liability reform, ahead of a crunch
meeting next week called by the Financial Reporting Council.

Some key institutions will not be able to make the Wednesday meeting, which
has been tabled to discuss the findings of the government’s report into the
audit market, Accountancy Age can also reveal.

‘The meeting will determine whether the issue is tackled substantively or
just another excuse to drive liability limitation,’ said Iain Richards, head of
governance at Morley Fund Management.

‘Proposals that help shore up an unacceptable position wouldn’t do anything
for shareholders,’ he said.

Richards added that Morley itself, alongside other investors, would not be
able to make the meeting.

The report has underlined concerns held by investors and other stakeholders
about the dominance of the Big Four in the audit market.

One area that is attracting attention is the fact that standards setters are
often drawn from the Big Four.

The report said: ‘Several investors that Oxera interviewed raised concerns
about the structural links between the Big Four via institutions that regulate
audit and accounting, complaining that the influence of the Big Four on
rules-setting has led to an audit product which does not meet the needs of
investors, and which benefits the Big Four, to the possible exclusion of the
mid-tier firms.’

‘We have got some real structural problems,’ said one investor.

The European Commission, the World Bank and the SEC are all thought to be
concerned about the issue.

One area highlighted by investors is the influence of IFAC on international
standards, which many companies have found both expensive and troublesome.

For more on Oxera click here

Related Articles

The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

Audit The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

5d Carl Johnson, Stephensons
BDO holds off Big Four to retain top position as AIM auditor

Audit BDO holds off Big Four to retain top position as AIM auditor

6d Alia Shoaib, Reporter
FRC urged to fine Big Four firms penalties over £10m

Audit FRC urged to fine Big Four firms penalties over £10m

3w Alia Shoaib, Reporter
EY to audit Standard Chartered bank

Audit EY to audit Standard Chartered bank

1m Alia Shoaib, Reporter
KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

2m Emma Smith, Managing Editor
EY fined £1.8m over Tech Data audit

Accounting Standards EY fined £1.8m over Tech Data audit

2m Emma Smith, Managing Editor
Top 50+50: Firms post significant growth in new tax and audit rankings

Audit Top 50+50: Firms post significant growth in new tax and audit rankings

2m Emma Smith, Managing Editor
FRC closes investigation into PwC over Barclays compliance

Accounting Firms FRC closes investigation into PwC over Barclays compliance

2m Alia Shoaib, Reporter