20th May 2011:

I hate it when people say “I told you so” but…

.. it is very tempting to do so in the wake of the announcement by the UK’s Office of Fair Trading (OFT) earlier this week.  

Under the headline “Antitrust watchdog urges reform to break audit grip of Big Four” the FT states:

          “Regulatory action may be required to break the dominant grip of the Big Four accounting firms on UK audits of leading companies…”

The only word I would challenge is “may” – it should say “will”.

The OFT said it had “… reached the provisional view that there are reasonable grounds for suspecting there are features of the market that restrict, distort or prevent competition in the UK” – to which I would add in many/most other countries as well.

According to Accountancy Age, the Chief Executive of the Financial Reporting Council, Stephen Haddrill, said:
 
“…that the OFT's expertise and power made it well-placed to deal with opening up the audit marketplace.”

"Having explored ideas for addressing these issues through our Market Participants' Group, it has become clear to us that the competition authorities are better placed than audit regulators to tackle competition concerns," said Haddrill.

At long last it seems that something might now be done to open up the audit market.  It is a shame it has taken so long and that it will require regulatory intervention – though it is not too late for my colleagues in the Big Four, and others, to act on a voluntary basis to create the environment necessary to allow real competition.

 Global Accounting  Standards & Regulators  0 Comments May 20th, 2011