Steve Varley, Simon Collins, Ian Powell and David Sproul have been looking forward to today. This is the first time in two years when the bosses of EY, KPMG, PricewaterhouseCoopers and Deloitte respectively have not had the Competition Commission breathing down their necks.
Laura Carstensen has finally concluded a torturously thorough investigation into the overwhelming dominance that the Big Four accountants hold over the listed audit market. Those four run the numbers of more than 90 per cent of FTSE 350 firms and all but one of those in the blue chip index of 100 biggest quoted companies.
Mid-tier accountants, such as BDO, Grant Thornton, and Mazars, believe that these companies have too cosy a relationship with their auditors, which is ultimately detrimental to the quality of service they provide. One-third of the FTSE 100, for instance, has employed the same accountant for more than two decades, a situation that has prevented these smaller auditors from loosening the Big Four's stranglehold on an £800m-fee market.
The changes that Ms Carstensen finally recommended yesterday will change the nature of auditing in the UK – but they are not the market-shattering reforms that have previously been promised. This is why BDO senior audit partner James Roberts could accuse the inquiry of a "cave-in", while still hailing a "victory" for the mid-tier.
Ms Carstensen, one of the City's best-known "super-mums", having juggled bringing up six children with a high-flying legal career, had looked at forcing companies to change auditors on a regular basis. The accountancy industry was shocked at how tough she was willing to be, though Ms Carstensen then settled this summer on forcing firms to put the audit role out to competition every five years, allowing them to keep the incumbent if they were the strongest bidder again.
The Big Four were dismayed, arguing that such regular tendering could cost the market an unnecessary £100m or more a year, and could backfire as many firms would just pay lip service to pitch processes that happened so often. The 100 Group of finance directors from the FTSE 100 protested that they could "not understand" why Ms Carstensen had proposed the idea, while BT director Glyn Parry argued the result would be "less meaningful" tender processes.
Yesterday, the inquiry surprisingly backed down again, settling on a compromise that, arguably, doesn't quite please anyone: mandatory tendering every 10 years. Under the five-year plan, companies would have had the opportunity to explain why they had delayed a competition to select an auditor, such as if there was no finance director in place. Now they will have to run a selection process every decade even if there are extenuating circumstances not to do so.
"I think that making this mandatory is unnecessary," argues PwC head of assurance James Chalmers. "We have a good UK approach in 'comply or explain', with shareholders and audit committees who would demand explanation [if a tender wasn't run]."
Where Mr Chalmers and Mr Roberts are in agreement is that the investigation itself has already helped prompt dramatic changes in how companies look at their audits. Previously a rare occurrence, PwC calculates there have been 24 tender processes in the past 12 months and Mr Chalmers is getting ready for another "big increase".
Mr Roberts adds that the inquiry has "opened up people's eyes" to the need to monitor the work of auditors. Recent tenders have seen EY win BG Group from PwC, which in turn took HSBC from KPMG.
Mazars' David Herbinet points out that "the door that was once shut and firmly bolted to firms like ours has now at least been nudged ajar". But few believe Mazars and its peers will be able to take on the Big Four in huge multinational audits any time soon.
Ms Carstensen has conceded that the proposals are not a quick fix, but argues it is up to those outside the Big Four to grab the opportunities mandatory tendering will give them. Yet mid-tier sources concede they are unlikely to consider something as complicated and expensive as looking after the books of a big bank, even though the Big Four have come under such criticism for failing to spot flaws in their balance sheets that caused the financial crisis.
At the top end of the market, there is no sense that the Big Four will become five in the coming years. Rather, the growing number of competitive bids for audit work will see PwC, EY, Deloitte and KPMG square off on a more regular basis and fight each other harder than ever before.
That might not be Ms Carstensen's ideal result, but still means she will have ended the closed club culture that has characterised big audits for too long.
New threat from Europe
Domestic regulators might have brought their investigation into the Big Four to an end, but PwC, KPMG, EY and Deloitte are still under threat from Europe.
Internal markets commissioner Michel Barnier has talked tough on his own audit market reforms for years, with perhaps the most extreme idea being to break up the biggest accountants into audit and non-audit firms.
However, EU member state representatives seem to have finally settled on capping non-audit fees, such as advising on stock exchange flotations, and forcing firms to change accountants every 20 years. Banks and other financial institutions would have to change more often.
Accountancy industry insiders believe that the EU will fail to get these reforms approved by next year, the deadline because the current Commission's term of office ends in October. That would mean the issue would have to be put back open to debate and the policies redrafted.
High-profile audit wins over past 12 months