In an increasingly complex and global market place, the demands of auditing large international companies with a diverse range of operations and locations increasingly requires their auditor to offer services that match these and in similar locations. This has resulted in the emergence of the large global accounting networks. The European Commission (EC) stated into its recent audit reform proposals that the size of the Big Four and the breadth of services they can provide are a barrier to the ability of small and mid-tier firms to develop the necessary skills and expertise to undertake the statutory audit of large, global companies and that there is a systemic risk to the market if one of the Big Four were to fail. They therefore suggested measures to address these issues – including mandatory firm rotation, substantial bans on non-audit services, and, in specific instances, the formation of ‘audit only’ firms.
We believe healthy competition is good for the marketplace. However, this should not be achieved through artificial intervention which is detrimental to audit quality.