A global warning for the Big four

Red faces because the Big Four firms have failed to see off the challenge of
the mid-tier firms in the first year they were included in the same award. Our
judges were emphatic that BDO’s entries stood out among the six firms that
competed and would make no apology for having made their selection.

But the result goes beyond just choosing a mid-tier player ahead of one of
the established global outfits. It sends a clear message that some of the top
people in the City believe that firms such as BDO can compete.

Our judging panel included among others Philip Broadly of Prudential, Stuart
Bridges of Hiscox and Sir Digby Jones and Iain Richards of Morley Fund
Management. Figures such as these know what they like, and like what they saw.

But there is also the context in which this has happened – an ongoing debate
about whether the UK has enough big audit firms to make regulatory sense.
Recognition of BDO as a player starts to change the terms of the debate, and
highlights the ability of the mid-tier to offer comparable services. The award
almost creates a landmark – a point at which the mid-tier overcomes the
‘prejudice’ against them and overturn the ‘myth’ that only the Big Four are
able.

It is unlikely we will see any interventionist solution to the shortage of
big auditors. It’s a process of recognition – a market transaction in which the
buyers of audit services must decide who they hire. What’s important is that
corporates seem to have started that process. But BDO and other firms must
recognise they still have to compete. Regulators and commentators can’t win
business for them.