James Moore: Can the FRC make its new challenge add up?

Outlook Life's good for KPMG, Ernst & Young, Deloitte and PricewaterhouseCoopers. With the help of a legion of allies from the corporate world, they managed to convince the Competition Commission to stop short of forcing big companies to regularly change their auditors.

Although the Commission denies giving in to pressure, this was the one change that the auditors really didn't want.

And there's more. Even the limited reforms that were proposed by the Commission have been watered down. Big companies will now have to put audit work out to tender every decade, rather than every five years, although this doesn't mean anything will necessarily change. This limited measure might actually consolidate the grip of the Big Four if smaller listed companies receive tenders from them and decide they quite like the prestige of having their names on their rosters of advisers.

So it's over to the Financial Reporting Council, which is finding its feet as the industry regulator, to oversee a shake-up and deal with a lengthy list of failings. One thing the Commission has done is require it to review the audit engagement of Britain's 350 biggest companies every five years on average. As the FRC is already finding with its disciplinary work, this is an industry that isn't used to being called to account. And it has friends in very high places. In handing its fellow regulator these new powers, the commission has passed it a hot potato. We'll have to wait and see whether the FRC has the backbone to run with it.