PwC, the market leader, is expected to lose out under the new rules, but chairman Ian Powell commented: “It’s obviously a challenge to the business, but actually our experience so far has been positive.”
Stephen Griggs, managing partner for audit at Deloitte, told City A.M.: “While we have lost some tenders, we are pleased with the new FTSE 100 audit clients we have won, including M&S, Tesco, Admiral and Wolseley.”
Hywel Ball, UK managing partner for assurance at EY, added that the new legalisation would not increase competition in the market, as the majority of audit and advisory work would still be shared around the Big Four, with no new FTSE 100 entrants making gains.
He told City A.M.: “I think the benefits to the company are a fresh perspective and innovation in approach, coming out of the competitive activity, which then needs to be balanced against the costs of tendering for all parties and the cost of transition.”
He added that it would boost investor confidence if a new auditor came in and approved old accounting practices of companies.
The new laws are designed to increase accountability by ending long relationships between auditor and client. The CMA ruled that from January this year it should be mandatory for FTSE 350 companies to put their audit up for tender at least every 10 years. The EU parliament passed similar legislation last summer, requiring all EU public interest entities to rotate their statutory auditors, which will have to be implemented by 2016.
This applies to all FTSE 350 companies, and those with listed debt, many private equity companies, and all banking and insurance firms.