TRANSFORMING the Audit Commission into a major competitor for the Big Four is a key House of Lords recommendation for reducing market concentration.
Baroness Hogg, chairman of the Financial Reporting Council, told the committee the abolition of the public sector auditor could provide a real opportunity to foster competition and choice.
Her comments were eagerly seized and the Lords called on the government to “encourage the emergence of such a competitor”, agreeing that it would be preferable to prevent the Big Four from snapping up the watchdog’s work.
However, the committee admitted such a move could contravene EU laws on public procurement, saying there are “practical difficulties”, but “the prize of greater competition in the market makes this proposal worthy of further consideration”.
James Roberts, audit partner at BDO, cautiously welcomed the use of the Audit Commission to break up concentration at the top of the market.
He warned the body as it stands is unlikely to blossom into a major player, saying its domestic focus and modest revenues mean it would not be able to compete.
But a merger or mutual trading with a second-tier firm would undoubtedly build capacity and add weight to bids for large-scale work, especially in the public sector.
(Picture shows the Lords economic committee members delivering the report earlier today ©Iain Winfield/Incisive Media)
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