Are we ready to face our rivals

The firm caused a stir last time round when examining the UK market, and they
wouldn’t have been the Big Four’s first choice for the job.

Gunnar Niels, who led Oxera’s previous research, must now provide a study
exploring ideas around opening up the ownership of audit firms to other parties.

Paul Boyle, the FRC chief executive, has already raised the issue of
ownership structures. He thinks it could open up the industry to rivals. But can
the accountancy industry be compared to others? There are many reasons why it
can not.

Firms are global, for a start. Any new challenger would not be challenging a
UK firm making a mere £300m in profits. They would need, from the outset, to
challenge a £15bn global outfit.

More than that, there’s a reason why the partnership structures work.
Auditors check financial results for the benefit of investors. There are
conflicts of interest in serving investors who are themselves your own
investors, and appropriate Chinese walls need to be in place.

Some listed firms have managed it. Even if the prospect of a challenger to
the Big Four looks unlikely, all barriers to entry must be removed to create the
possibility in the first instance.

Penny Sukhraj is a reporter on Accountancy Age

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