Laura Carstensen led the two-and-a-half hour grilling, sharply questioning the half-dozen group of accountants, economists and lawyers sat before her. Carstensen's team outweighed the witnesses by at least 10 people; a stenographer sat in the corner taking down every word uttered at the Competition Commission's London headquarters, a stone's throw from the British Museum.
"It was quite a bit like being interrogated," says one of the bean-counters who faced Carstensen, a City supermum who has juggled commission inquiries into the audit and airports markets while raising six children. "Our presentation had lasted 20 minutes and you got the impression they had been keen for us to have gone on for no longer than 10."
This was just one of many inquisitions of the country's biggest accountants that Carstensen held in late September and early October. It was a crucial fortnight in what is now a 16-month probe, as expert evidence seemingly confirmed commission suspicions that, yes, the audit market is indeed skewed in favour of the dominant Big Four accountants.
On Friday, Carstensen put forward a series of recommendations to loosen what she views as the stranglehold of KPMG, PricewaterhouseCoopers and Ernst & Young on the FTSE 350 market. Those four run the numbers on 96 per cent of those firms, raking in nearly £770m in audit and related fees in 2011-12 alone, while they often keep hold of clients for 20 years or more according to some studies.
Carstensen has proposed ways of breaking up what smaller firms, in particular the Big Four's closest yet still distant competitors, BDO and Grant Thornton, have for years claimed is a cosy little club. Notably, she is keen on mandatory tendering and rotation.
These ideas would see businesses forced to make auditors bid for their accounting contract every five or seven years, made more severe if rotation were enforced. Then, auditors would not be allowed to continue working for the company – controversial, as they could be doing a good job.
Furthermore, the commission wants to make sure that shareholders and audit committees have more of a say on the accounts. In effect, Carstensen wants to ensure that finance directors cannot be swayed to reappoint auditors who present accounts as flatteringly as would suit them.
"We're almost the shareholders' representative," says Carstensen, suggesting that an auditor's interests are not always aligned with those of investors. "There's a stickiness in the market – the fact is that companies stick with an audit firm for decades, which can potentially lead to quality issues. There would be price benefits from switching around."
She didn't go as far as some at EU level, most notably internal market commissioner Michel Barnier, would have liked. They think that these big auditors should be broken up, so that they don't have corporate advisory arms bidding for work, such as raising debt or making acquisitions, from the same multinationals that let them go over their books.
"We did look at this issue," confirms Carstensen. "There was a quite widely held view that audit is used as some kind of loss leader to win advisory work, but we didn't find that to be the case. We also didn't think there was an issue with finance directors going back to their old firms [if they had previously worked at an auditor]."
Still, even those wanting to take the axe to the Big Four were left stunned at how tough these interim proposals were. If these "remedies" to the competition problem are watered down in the final report this summer, they are still likely to be significant enough to change how the industry works.
"This has been more hard-hitting than I was expecting, I have to say that I was pleasantly surprised," chuckles James Roberts, a senior audit partner at BDO. "Within five years, I would hope that we would get south of 90 per cent of FTSE 350 companies using the Big Four – 80 per cent would be good."
However, Roberts also notes a more fundamental reason for the Big Four's power that Carstensen and her team surely cannot address: "They're bloody good, that's a problem. I can't knock them in that way, that's for sure."
The Big Four has argued that the multinational giants that make up the FTSE 100 index need to hire similarly large accountants. Only they would have the scope and clout to fully understand, for example, the various accounting rules from Rio de Janeiro to London or Accra to Beijing.
As a result, the FTSE 100 has either been 99 or 100 per cent the preserve of the Big Four and, these firms claim, this is not a problem. KPMG's senior partner Simon Collins recently argued: "We fight like cats and dogs to do the best job possible at the best prices. To go off and audit a very large global bank of real physical scale, it is not practical to say that firms ranked five, six, eight can do that work. That's not the same thing as saying the market is closed."
The Big Four themselves have not been accused of doing anything wrong, the problems, instead, being described by Carstensen as "systemic".
Richard Crump, the deputy editor at trade website Accountancy Age, adds: "What was interesting was the idea that audit firms are taking the interests of management over shareholders. The mid-tier firms I've spoken to aren't actually sticking the boot into the Big Four over that, they say that this is a consequence of there not being a mechanism to report directly to investors and audit committees."
Carstensen's next job will be to flesh out her proposals: even the full interim report is not out until this week, last Friday's publication merely being a summary of her findings.
Even the condensed version, though, is still fairly clear how unimpressed the commission is with the current structure: "We consider that the finance director's role in selection and reappointment of the company's auditors should be limited to the minimum necessary… In effect, the conduct of reporting relationships should be free of any material influence of the finance director on external audit."
Nevertheless, the Big Four are likely to keep on fighting on this issue. Hywel Ball, the head of assurance for UK & Ireland at Ernst & Young, argues that there are "important omissions" on how the current framework operates.
"For example, there is no mention of the role of the chair of boards and the senior independent directors in representing and safeguarding shareholder interests, nor of the importance of unitary boards themselves. We think the somewhat stark description in terms of the role and power of the finance directors and their motives does not represent the real world as we experience it."
The other inquiry that Carstensen is known for was her senior role in the investigation into what was until recently known as BAA. The Spanish-owned group fought a legal battle for years after the commission in 2008 said that BAA was too dominant in South-east England and Scotland, and that the Heathrow-owner should sell up to three airports.
Only recently has the group accepted that break-up was inevitable, with Stansted finally sold off last month to join Gatwick and Edinburgh under new ownership.
The Big Four could prove equally resilient to such a major upheaval of their successful businesses.