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UK: Could CC’s Big Four sanctions backfire?

By  |  August 12, 2013

The UK’s Competition Commission could be making a mistake with its proposed plans to shake-up the auditing market through requirements of changing auditors every five years, said the Financial Reporting Council. The remarks, made in response to the Commission’s Provisional Decision on Remedies to increase competition in the auditing sector run largely by just four firms, included claims that mandatory auditor switching may turn into a “sham process” that may not be taken seriously. Further, the FRC warned, the process may have adverse effects and actually lessen competition in the market, as smaller auditing firms do not have the funds to tender to frequently, thus keeping the so-called Big Four auditors at the head of the game. Instead, the FTC suggested, companies should be required to switch auditors every 10 years.

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