Size matters in choosing an auditor, Big Four say

Mark Leftly
Monday 26 November 2012 01:00
Comments

The Big Four accountants have launched fierce defences of the reasons for their market dominance in auditing major companies.

In their latest submissions to a Competition Commission probe, PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young are fighting claims at both a domestic and European level that they have an unfair stranglehold on the market. Mid-tier firms, such as BDO and Grant Thornton, have grown increasingly excited that the UK inquiry, chaired by former City lawyer Laura Carstensen, is finding evidence which confirms their arguments that the market needs to be opened up.

However, in submissions discreetly published on the Competition Commission website on Friday, Deloitte took umbrage at the suggestion that because so many FTSE 350 finance directors and audit committee chairmen were Big Four alumni, they automatically pick former employers to do their accounts.

The Deloitte paper said: "We completely disagree with these allegations which seem to us to be a direct criticism of the integrity of some of the UK's leading businesspeople."

The Big Four particularly dominate the FTSE 100 client list. Between 2001 and 2011, every client in the top index to switch auditor did so among the largest accountants.

PwC said mid-tier firms simply do not match the capabilities of the Big Four when it comes to auditing groups which have hundreds of subsidiaries. It added: "The hurdle faced by the mid-tier firms is the fact that they do not possess the attributes needed to conduct an audit of the relevant companies."

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in