'Another decade of prejudice' against mid-tier accountants

 

Accountants outside of the industry’s ‘Big Four’ will continue to suffer from “institutional prejudice” for another decade despite incoming regulatory reforms, the managing partner of BDO has warned.

Simon Michaels told The Independent that BDO and other leading mid-tier auditors, such as Grant Thornton, will need 5-10 years to “break the stranglehold” of KPMG, PricewaterhouseCoopers, EY and Deloitte have on the listed audit market.

They run the numbers of more than 90 per cent of the FTSE 350 and almost the entirety of the blue chip index of Britain’s 100 biggest quoted companies. However, the Competition Commission last month ordered that FTSE 350 companies put the audit role out to tender every 10 years to help break what are perceived as damagingly cosy relationships with their existing Big Four accountants.

Mr Michaels, though, has only targeted increasing BDO’s market share in the FTSE 350 from 3 per cent to 5 per cent by 2018. The mid-tier firms believe that directors at leading corporates fear risking their reputations by not appointing one of the major-league accountants.

He said: “While the Competition Commission has been really helpful in pushing open the door, institutional prejudice is going to take a bit longer to break. We’ve experienced that for sure: it’s the IBM factor, in that nobody ever lost their job for hiring IBM.”

The European Union is looking to push through its own reforms which could be tougher than domestic regulations but must be confirmed by next year. Mr Michaels said that it would be “another piece in the jigsaw” should the EU make it mandatory to swap auditors after a set number of years.

BDO announced its full-year results today, confirming the group’s position as the number five auditor globally ahead of Grant Thornton. Fee income increased by more than 7 per cent to $6.45bn (£3.95bn), while UK audit turnover was up 16 per cent to £111m.

BDO’s figures were boosted by its merger with smaller rival PKF in April, which also led to a 40 per cent increase in staff. Overall British fee income, which included advisory and tax work, was £312m.

“[Last year] saw us working with brands such as Snow & Rock, Fever Tree, Warner Bros and Christian Louboutin, and with the CBI to champion mid-market businesses as central to the UK’s growth,” added Mr Michaels. “The economic outlook is improving and we need to continue to invest.” 

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
life
News
news

The party's potential nominations read like a high school race for student body president

Voices
A mother and her child
voices
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
Arts and Entertainment
Cold case: Aaron McCusker and Christopher Eccleston in ‘Fortitude’
tvReview: Sky Atlantic's ambitious new series Fortitude has begun with a feature-length special
Voices
Three people wearing masks depicting Ed Miliband, David Cameron and Nick Clegg
voicesPolitics is in the gutter – but there is an alternative, says Nigel Farage
ebooks
ebooksA special investigation by Andy McSmith
News
i100
News
people
Sport
Chelsea manager Jose Mourinho
footballI have never seen the point of lambasting the fourth official, writes Paul Scholes
Life and Style
Vote green: Benoit Berenger at The Duke of Cambridge in London's Islington
food + drinkBanishes thoughts of soggy school dinners and turn over a new leaf
News
Joel Grey (left) poses next to a poster featuring his character in the film
peopleActor Joel Grey comes out at 82
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee