More players needed in the statutory audit market

Mazars UK said there was public interest need for additional players in the FTSE 350 audit market in its response to the Competition Commission's (CC) provisional findings report.

In the response, Mazars UK head of public interest markets David Herbinet said that the main question is whether the CC investigation leads to firms other than the Big Four gaining market share over the next few years.

"You will not get a revitalised market if all that results is the big four swapping a few more audits amongst themselves," he said.
"You only have to look at the case of Schroders. PwC were in place for more than fifty years; they were replaced with KPMG for little more than fifty days and now PwC comes back through the revolving door. New players are needed in order to bring innovation and fresh thinking to an ossified market."

The asset management company Schroders appointed KPMG earlier in the year, but following an investigation, which found independence issues, PwC was re-appointed as auditor.

Commenting on the CC's finding that it was hard for new players to enter the market because FTSE350 companies wanted only to appoint auditors with current FTSE350 audit experience Herbinet said: "We have got to break the vicious cycle whereby you can only get appointed to a FTSE350 audit if you already have one. We need to convert it in into a virtuous circle whereby confidence in new players builds such that they are entrusted with increasingly large FTSE350 appointments."

The CC issued its provisional findings in late February and is expected to issue a final report with potential remedies to increase competition in the autumn.