Friday, 21 October 2011

Top accountants under scrutiny

The big four accountancy firms which audit big companies' accounts are to be investigated by the Competition Commission. The move comes after widespread criticism that companies pay too much and have little choice who to use.

The Competition enquiry into the audit business has been triggered by the Office of Fair Trading which found that four accountancy firms -- PriceWaterhouse Coopers, KPMG, Ernst and Young and Deloittes -- dominated this £600m industry with little switching going on and limited opportunity for smaller players.

One firm, PriceWaterhouse Coopers or PWC has a 47% share of companies in the FTSE 100 stockmarket index. And, on average, FTSE companies, the biggest names in British business, will change their auditor only once every 43 years.

The costs involved in switching can be prohibitive, estimated to be as much as £1m a time for a large company.

Possible measures to re-ignite competition could include forcing auditors to shares contracts, limiting an individual firm's market share and designing a standard way to hand over information when an employer switches auditors.

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