Now that the issue over auditor liability has been resolved – surprise opposition from the House of Commons aside – the profession will turn the glare of attention towards the debate on audit competition at the Financial Reporting Council
Despite being treated as separate issues, it is impossible to ignore the fact
that the ability to negotiate liability limitations will have a huge impact on
the competition issue.
Indeed, it has been suggested that once the company law reform bill makes it
into the statute books, mid-tier firms will be more confident of stepping into
Big Four territory, and we are seeing some signs of this from BDO and Grant
Thornton.
But if this is the case, why did the government reserve the right to change
liability limitation agreements in case they prove to be anti-competitive?
It seems that those who drafted the bill may not be sure of its consequences,
heaping more pressure on the FRC to get policy on the Big Four dominance right
first time.
Paul Grant is a senior reporter
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