LONDON (Reuters) - The Financial Reporting Council (FRC) could be enlisted to help end “Big Four” dominance of blue chip company book-keeping, the Competition Commission has said.
The accounts of most top UK companies are checked by PwC, Deloitte, Ernst & Young, or KPMG, sparking policymaker concerns the four are too cosy with banking clients in particular.
The Commission outlined in February its potential “remedies” to make it easier for the next tier of accountants like Mazars, Grant Thornton and BDO to pick up more business.
It will say next month what actual measures it will use to shake up Britain’s “sticky” audit market.
In a late but not unusual move on Wednesday it unveiled an extra potential remedy: enlisting the help of the FRC to underpin other anticipated measures.
Each year the FRC samples audits of big firms to check on quality and has just published its findings.
“The further proposed remedy we are considering is to give the FRC a secondary duty to promote competition between firms providing audits to the FTSE 350 companies,” the Competition Commission said in a statement.
This secondary duty would require the FRC to consider how it might review and report on audits of large companies in a way which promoted competition, the Commission said.
The FRC’s audit checks could help companies and shareholders better assess the quality of service they are getting and, in combination with other remedies, could make a company more likely to switch auditors, the Commission said.
The FRC said its primary focus should remain audit quality and it was meeting with the Commission later this week to find out precisely what it envisages.
A public consultation on the Commission’s latest potential measure was opened until June 19.
The idea echoes the move to give the new UK Financial Conduct Authority, which protects consumers, a secondary requirement to promote competition in financial services.
Like the FCA, the FRC would not have powers like the Office of Fair Trading (OFT) to enforce competition rules that directly change market structures.
A senior official from one of the Big Four firms said it could be operationally quite challenging for the FRC which, in the past, has said the OFT or Competition Commission should be the bodies looking at competition in auditing.
Reporting by Huw Jones; editing by Ron Askew