One of those issues that emerged early on was a proposal from the ABI that
audit firms should be limited to a certain number of FTSE100 clients.
The large firms have been less than polite about the proposal, but the
suggestion from Peter Wyman, that it was ‘silly,’ is the only one that has made
it (and could have made it) into print.
The argument is fairly simple. If a firm was limited to 15, or say 20 FTSE
100 companies, other companies would effectively not have a choice of auditor.
So if you were last in to the FTSE 100, an up and coming giant, the argument
runs, you might even be at a competitive disadvantage in not having the quality
of auditor of your bigger rivals (the Big Four are too polite to make this last
point, but you know they’re thinking it).
It’s a good argument, and you might even say that such a move would be a
barrier to trade. But the proposal is a superficially attractive idea. Can it be
The other argument that is coming from the Big Four is a defence of their
monolithic status. We are the guilds of the modern financial system, they say.
There is a collective wisdom in our bulk that should not be tampered with.
John Griffith-Jones made the case recently, saying that this was a system
that ‘if we destroyed it we would never be able to recreate it.’
I’m sceptical of this guild idea. The idea of a guild has, too, a superficial
attraction in an age where the certainties of the medieval world have gone. But
they’re not, surely, a model for how an economy should be run today. And is the
financial system not dynamic enough to make up any loss?
Alex Hawkes is news editor of Accountancy Age
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