RegulationCorporate GovernanceOxera returns in ownership probe

Oxera returns in ownership probe

Plans to introduce alternative investment gather momentum around the world

charlie mccreevy

The EU’s Charlie McCreevy comissioned the Oxera report

Senior figures in the profession have been contacted by EU-hired consultants
investigating the ownership of audit firms, as plans to introduce alternative
investment gather momentum around the world.

Oxera, the group whose
report into the UK audit market raised the hackles of the Big Four, has been
commissioned by European commissioner Charlie McCreevy to look into the issue,
which has already attracted the support of Paul Boyle, chief executive of the
Financial Reporting
Council
.

The move could open up firms to alternative investors. Currently, most
countries insist that firms are owned by qualified auditors.

The news of Oxera’s involvement will alarm the Big Four, who preferred
alternative analyses of the audit market to Oxera’s.

Oxera’s analysis stressed the problems of only four major firms and implied
that the market was not working effectively.

The EC confirmed this week that it has commissioned the firm. It had
previously used London
Economics
to carry out similar work.

The US
Chamber of Commerce
, headed up by Thomas J Donohue, yesterday kicked off a
series of talks on capital markets with a report recommending that audit firms
be allowed to raise capital from shareholders other than audit partners, subject
to resolving independence issues.

The moves in the EU and the US simultaneously signal an unusually concerted
global push on the issue, as regulators seek to find a way out of the current
market position enjoyed by the Big Four on audit. It is also a boost for Boyle,
who backed the idea as a way to open up the market.

Oxera’s brief is to analyse the importance of ownership rules as a barrier to
entry, to document the rules across the EU and to analyse those rules in rel
ation to competition and choice.

Neil Sherlock, KPMG partner said the idea should be debated: ‘Clearly there
are some independence aspects that will need very careful consideration.’

A Deloitte spokeswoman said: ‘We are unconcerned about the possibility of
ownership rules being relaxed. It could be a good thing in promoting competition
in the sector, as long as an appropriate focus on quality is maintained.’

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