Big Four must prepare to lose market share

In other responses on the latest consultation on the issue, KPMG cited
Parmalat as an example of a joint audit gone wrong. The firm also could not see
the benefit of allowing shareholders to vote on audit committee reports.

The Market Participants Group, tasked with providing market solutions to the
dominance of the Big Four, had opened up its initial recommendations to

Responding, Jeremy Newman of BDO said some Big Four firms were now targeting
BDO’s clients, saying he accepted the competition but adding: ‘If there is to be
greater choice in the UK audit market then some of the current participants
will, inevitably, lose market share.’

Grant Thornton, in its response, said contractual obligations when auditors
were being selected should be disclosed. The mid-tier want

to flush out any suggestion that lenders or parent companies may

be forcing potential clients away from them.

Mazars, which has pushed joint audits, emphasised the lack of tenders taking
place in the market.

David Herbinet of Mazars said: ‘When FTSE 100 auditors can expect to remain
in place for 48 years and 70% of those audits are not put out to tender in at
least a 15-year period, this does not suggest a healthy competitive market able
to offer real choice to end users.’

Mazars wants the FRC to conduct an independent review of the value of joint
auditing. Big Four firms have vociferously opposed the idea, which they say
would lead to no audit firm taking final responsibility for an audit judgment.

The Institute of Chartered Accountants of Scotland urged the regulator to
come up with contingency plans that could be effected in the event of the
collapse of a Big Four firm.

Watch an interview with David Herbinet at
AccountancyAge TV

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