BRITAIN’S top companies will have to put their accounting business out to tender every five years to encourage competition between audit firms, the Competition Commission proposed today.
The regulator outlined its plans to break the stranglehold of the ‘big four’ accounting firms: Deloitte, KPMG, PricewaterhouseCoopers and Ernst & Young, ahead of its final report this autumn.
Measures include the prohibition of clauses in documents which would limit a company’s choice of auditor to the ‘big four’ firms.
“This is a comprehensive set of measures that will ensure that shareholders are better served by a more competitive market for statutory audit which is more responsive to their requirements,” said Laura Carstensen, chairman of the Audit Market Investigation Group.
“More frequent tendering will ensure that companies make regular and well informed assessments of whether their incumbent auditor is competitive and will open up more opportunities for other firms to compete. A more dynamic, contestable market will reduce the dangers that come with overfamiliarity and long, unchallenged tenures.”