BusinessCompany NewsGetting ready to play with the big boys

Getting ready to play with the big boys

It is encouraging to see that BDO Stoy Hayward is doing so well, as shown by the firm’s growth rate of 25% posted last week

In fact, BDO is outstripping the rate of growth among the Big Four and
putting its nearest mid-tier rivals in the shade – it’s nothing short of an
astonishing performance.

Given all the talk about the lack of auditor choice for the FTSE 350, the
news begs the question whether BDO will soon be large enough to compete with the
big boys? Could organic growth alone take them into the big league?

The answer to that must be no. As impressive as it is, it’s unlikely that
even these sorts of figures would allow BDO to compete with even the smallest of
the Big Four firms.

For a mid-tier firm to compete, it needs a huge investment in systems and
staff. And that’s going to require a number of things, starting with regulatory
protection, so that one cock-up would not spell the end of the firm – a
requirement the company law reform bill will deal with, at least in part. And
then it needs the will and courage of the firm’s management. That’s when a
reduction in risk appears to make so much sense.

Perhaps, most of all, a change is needed in the corporate perception of the
mid-tier and of changing auditor. Here’s where the Financial Reporting Council
and the FSA have a big role to play. They must convince corporates that there is
no loss of reputation if they pick a new auditor or plumb for one outside the
Big Four.

From comments made at the recent summit to debate the findings of the Oxera
audit competition report, this could be the biggest obstacle of all. Clearly,
what’s needed is an audit charm offensive – if that’s not a contradiction in
terms.

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