The former head of the Financial Reporting Council doesn’t expect much from the Government’s audit reforms, saying the Big Four accountants have lobbied hard and distracted from the main issue: competition.
Paul Boylle, who ran the FRC between 2004 and 2009, told the FT that the Government’s proposals, published in March, shift the focus on to corporate governance instead of attemping to reduce the Big Four’s dominance in the sector.
Financial directors will be more responsible for disclosing financial information if the proposals come into force, which put the spotlight on governance at the client, rather than the lack of choice of auditors for large firms.
The Big Four – EY, PwC, KPMG and Deloitte – currently sign off the accounts for all FTSE 100 companies and the Government had set about increasing competition in the industry.
“The audit firms . . . have done a good job, from their perspective, of deflecting attention away from the fundamental problem of lack of choice in the market on to improving standards of corporate reporting and corporate governance,” he said.
“I’m not saying there’s no scope for improving standards of corporate reporting and corporate governance but that’s not the fundamental cause of the pressures that we’re currently experiencing,” he added.