BKR Haines Watts leads attack by smaller firms on public sector audit market
Smaller firms are to be allowed into the public sector audit market to serve customers the big firms do not want.
Andrew Foster, head of the Audit Commission, announced on Monday that BKR Haines Watt has been awarded a major contract to audit small councils in Hertfordshire and Buckinghamshire as part of an effort to open up the lower end of the public sector audit market.
Currently PricewaterhouseCoopers, KPMG and Robson Rhodes are the major private sector players for Commission work.
Haines Watt’s success came as Foster responded to criticism that the share of the Commission’s work going to private sector firms was too small.
Evidence given to a Commons select committee investigation by KPMG claimed a 30% share of the Commission’s work was too little for the private sector and more was needed to keep the firm’s interested.
Foster responded by stating the shares were not fixed and that the private sector is able to bid for more Commission work through ‘market testing’.He said the current domination of 70% of the market by the Commission’s own arms-length agency, District Audit, had come about purely as a result of competition.
‘We’re opening up the bottom end of our market to smaller firms who are more used to dealing with smaller accounts.
‘The 70-30 share is definitely not a fixed one. The truth is District Audit has been trying to protect its market share by getting better and better,’ he said.However, it is understood the firms have complained about the cost of market testing and recent criticism from KPMG is viewed as an effort to put pressure on the Commission to award them more work.