Audit debate reaches stalemate

I put the phrase in inverted commas because it started, of course, as the
audit ‘competition and choice’ debate, and has now dropped the ‘competition’
tag.

The Big Four assert that this is a very competitive market, thank you very
much.

The question, for some multinationals, is whether they have a choice if the
other Big Four firms are conflicted out from working for them. Oxera agreed and
the competition line went.

Jeremy Newman of BDO doesn’t quite agree. He said on his blog that there is,
in his view, ‘a possible lack of fair competition ‘ in the market.

The effects of compromise are being felt across the board.

The only thing that could worry the Big Four currently is the proposal about
the combined code, which might force them to have a non-executive on their
boards deciding top people’s salaries.

They will take that in their stride. The Big Four spend their lives advising
people on what they can do, as a minimum, to adhere to regulations like those.

The debate is petering to a halt, not least because the FRC set out to
provoke the market, and then invited the whole market to say how they would most
like to be provoked (in private).

The result is a bit like David Cameron’s ‘aroma’ politics. What people say,
and the general climate, is now regarded as the solution, rather than anything
substantial. Words are preferred to actions.

Apart from the lobbyists at the Big Four, is anyone satisfied with that
conclusion? And is there really no sweeping proposal out there that would help
to change the audit market?

More than that, should the FRC have initiated such a potentially radical
debate, when they must have known nothing radical was achievable?

Alex Hawkes is the news editor of Accountancy Age