Data reveals top four auditors are improving
The proposed regulatory clampdown of the "big four" accountants' dominance over the listed audit market was undermined yesterday with findings that suggest a massive improvement in the quality of their work.
KPMG, PricewaterhouseCoopers, Ernst & Young and Deloitte are facing Competition Commission proposals to break their stranglehold on the FTSE 350, where they run the numbers of more than 95 per cent of those companies.
However, the Financial Reporting Council said 79 per cent of FTSE 350 audits reached the highest levels of quality set by the corporate governance watchdog, up from just 55 per cent in 2011-12. By contrast, fewer than half of those audits assessed of non-FTSE 350 firms, where there is a better balance between the "big four" and the rest of the industry, showed fewer than half achieved the best grades.
These included the accounts of pension funds, charities, and those listed on the smaller Alternative Investment Market. Although the overall sample is relatively small at 85, this will reinforce "big four" arguments that the competition between them is sufficiently strenuous to ensure that they fight hard to provide the best audit standards. Critics have argued that the market is closed to mid-tier firms such as BDO and Grant Thornton that could potentially do just as good a job.
There was also a warning about one of the Competition Commission's key proposals, which is to make FTSE 350 firms put the audit role out to tender every set number of years to ensure an accountant is not in situ in perpetuity.
Paul George, the executive director for conduct at the FRC, said that the trend for tendering had to be well managed to ensure that auditors did not try to lower fees at the risk of compromising the thoroughness of their work.
He added: "We want to make sure that if they are offering reductions in audit fees that it is not at the expense of quality."
The EU will also hold its first public debate at ministerial level on its own proposals for audit reform today. These have generally been viewed as tougher than those suggested in the UK.
- 3 The enemy within: People who hear voices in their heads are being encouraged to talk back
- 4 Phil Neville backtracks on Tomas Rosicky 'I'd smash him' comments from Match of the Day 2
- 5 British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Asteroid narrowly scrapes past Earth: how to watch the closest space rock for decades as it flies by
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...