Audit, the Big Four, and European Commission proposals

The European Commission (EC) believes 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. They also believe that there is a systemic risk to the market if one of the Big Four were to fail.

The EC has set out a series of proposals that they suggest will 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.

Case study: Why global businesses need global audit networks Leading audit networks have grown in response to the needs of the market. As companies have become more global, they have required their auditors to provide consistent quality service across the world.

To conduct quality audits, firms need expertise in many areas such as tax, valuation, risks and systems – as well as the ability to keep pace with constantly changing regulations, standards and industries.