Choice for those needing the services of the largest firms was reduced when the Big Five was demoted to a Big Four following the demise of Andersen.
This position has been compounded by the extraterritorial reach of the US Sarbanes-Oxley regulations, which commonly now preclude auditors of the largest international corporations from supplying non-audit services, such as expert witness support, to their audit clients.
We are all too often in the position where our clients want the services of the most experienced teams from the large international firms, but we are left with no real choice as to which firm to instruct.
All too often, the position is even worse where there are a mixture of ‘proper’ conflicts, and not one of the Big Four may safely be instructed.
In areas where experience and expertise are restricted to the Big Four, satisfactory alternative experience and expertise may be impossible to find. Against this background of an already damaging reduction in effective choice, it is worrying to see apparent reluctance to support more protection for auditors from catastrophic litigation.
This is reflected in recent comments from one of the UK’s largest institutional shareholders, who said that unlimited auditor liability was ‘a reasonable proposition in an increasingly litigious world’.
It is not immunity from litigation that the profession seeks, but protection from complete destruction of audit practices and of livelihoods. Were the proposition true that smaller firms would readily move in to increase competition following the demise of a major audit practice, we would surely be seeing new entrants in those markets, but we are not.
Those who may safely shelter behind the protection of limited liability and the ‘corporate veil’ should not readily criticise moves for a measure of protection from potentially catastrophic claims on the part of a profession whose clients are already beginning to suffer from insufficient competition.
HMRC breaches client confidentiality; and partner profits fall at EY. These stories and more discussed in Friday Afternoon Live
Two new audit partners have been appointed at the firm BDO in its audit practice following continued growth and investment
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
Six new partners have been revealed by top ten firm Mazars