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| Competition Commission urges shakeup of accountancy market | Competition Commission urges shakeup of accountancy market |
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| Britain's largest companies should put their accounting business up for tender every five years, the Competition Commission has said, as part of an investigation into the dominance of the big four accountancy groups. | Britain's largest companies should put their accounting business up for tender every five years, the Competition Commission has said, as part of an investigation into the dominance of the big four accountancy groups. |
| It said FTSE 350 companies should be forced into considering a range of firms because the task of auditing accounts is too important to be left undisturbed for more than five years. It added that current rules are too focused on satisfying management rather than shareholder needs. | It said FTSE 350 companies should be forced into considering a range of firms because the task of auditing accounts is too important to be left undisturbed for more than five years. It added that current rules are too focused on satisfying management rather than shareholder needs. |
| The proposal was part of the commission's provisional findings into competition in the audit market, which is dominated by Deloitte, EY, KPMG and PricewaterhouseCoopers. | The proposal was part of the commission's provisional findings into competition in the audit market, which is dominated by Deloitte, EY, KPMG and PricewaterhouseCoopers. |
| Laura Carstensen, chairman of the commission's audit market investigation group, said: "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." | Laura Carstensen, chairman of the commission's audit market investigation group, said: "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." |
| The commission also concluded that companies should not be allowed to include clauses in documents that require the hiring of an auditor drawn from the ranks of the big four only. However, it stopped short of proposing that companies should be forced to switch auditors. | The commission also concluded that companies should not be allowed to include clauses in documents that require the hiring of an auditor drawn from the ranks of the big four only. However, it stopped short of proposing that companies should be forced to switch auditors. |
| "We do not see a competition problem with audit firms retaining business if they do a good job – but they will have to demonstrate this on a regular basis," said Carstensen. | "We do not see a competition problem with audit firms retaining business if they do a good job – but they will have to demonstrate this on a regular basis," said Carstensen. |
| The commission suggested that shareholders should be able to vote on whether audit committee reports in company annual reports contained sufficient information. | The commission suggested that shareholders should be able to vote on whether audit committee reports in company annual reports contained sufficient information. |
| It also indicated that the regulator, the Financial Reporting Council, could be handed greater responsibility over the accounting sector. A final report from the Commission is due by 20 October. | It also indicated that the regulator, the Financial Reporting Council, could be handed greater responsibility over the accounting sector. A final report from the Commission is due by 20 October. |
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