BDO wants root and branch audit overhaul

A root and branch overhaul of audit is required to bring assurance in financial statements, according to BDO.

The firm will argue to a Lords committee on Tuesday afternoon that audits for small businesses and company subsidiaries should be scrapped, while regulators should encourage investors and non-executives to consider hiring auditors outside of the Big Four.

The Lords Economic Affairs Committee will hear from BDO, Grant Thornton, Mazars and RSM Tenon for their views on audit market concentration.

BDO audit partner James Roberts pooh-poohed earlier reports that had suggested the firm would encourage government intervention to force auditor rotation. Instead the firm would prefer investors and company non-executives to be persuaded to consider auditor options outside the Big Four firms.

This could be achieved through regulation that requires transparency in the process of choosing an auditor, and audit committees showing that options outside the Big Four have been evaluated and considered.

“We don’t like the idea of government-style [audit] appointments,” said Roberts, “but audit committees directed to consider other firms.”

“The oligopoly is unhelpful. We hear general rumblings [from investors]. We have to get over the institutional prejudice.”

Only the largest banks, financial services firms and oil giants were currently out of reach of BDO’s ability to audit among the UK’s top companies, said Roberts.

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