THE UK’s top accountants are to have their own books scrutinised after the consumer regulator referred the business of checking companies’ figures to a full-scale competition inquiry.
The Office of Fair Trading (OFT) said it had been concerned for some time that the audit market is highly concentrated with low levels of switching and substantial barriers to entry.
The watchdog estimates that in 2010 the “big four” firms, PwC, KPMG, Deloitte and Ernst & Young, earned 99 per cent of audit fees paid by FTSE 100 companies, while between 2002 and 2010 only 2.3 per cent of the firms changed their auditors.
The industry was also heavily criticised last year by a House of Lords committee over conflicts of interest and the quality of published accounts in the run-up to the credit crunch.
The decision to refer the industry to the Competition Commission, which was widely expected, followed meetings with the accountants, customers and regulatory bodies, the OFT said.
OFT chief executive John Fingleton said: “Voluntary and industry-led efforts to increase competition and choice in this market have proved unsuccessful. Following extensive consultation, we have concluded that a reference to the Competition Commission is appropriate.”
Pressure on the “big four” accountancy firms has also been mounting in Europe, where the European Commission recently suggested a bar on auditors providing consulting services to audit clients.