• Register
Return to: Home > News > Standards > Competition Commission survey highlights concentration

Competition Commission survey highlights concentration

A UK Competition Commission (CC) statutory audit survey found 83% of FTSE 350 companies that recently switched auditors opted to choose another Big Four firm while 97% of all switches have been to or among the Big Four.

This highlights a high level of concentration in the UK’s audit sector, in which four firms carry out an overwhelming majority of listed company work.

The CC has been investigating concentration levels in the UK following an Office of Fair Trading referral in October.

The survey includes a sample of 607 interviews with FTSE 350 and non-FTSE 350 financial directors, chief financial officers and audit committee chairs.

Similar to FTSE 350 companies, 90% of non-FTSE 350 companies also stuck to the Big Four when switching auditor.

Half of FTSE 350 companies that switched auditor said it led to a decrease in audit fees and 64% said it led to improved audit quality. The results were similar for non-FTSE350 companies.


Two-fifths of companies have tendered in the past five years with FTSE 350 companies less likely to do so than non-FTSE companies.

Half of the companies surveyed last tendered six or more years ago or have never tendered. The most common reasons for not changing auditor were high quality service, good value for money and the fact that a company is happy as things are.

Interestingly, companies that use a non-Big Four firm (26%) are more likely to have never tendered than those who use a Big Four firm (11%).

When asked which firms are most commonly invited to tender, the Big Four dominate with KPMG and Ernst & Young mentioned most.

The survey found the disparity between the proportions of FTSE 350 and non-FTSE 350 companies that only invited the Big Four. Six out of ten FTSE 350 companies only consider Big Four firms in tenders compared with 46% of other companies.

The survey found Big Four only tenders were linked to the company’s size. Seventy percent of companies with 10,000 or more employees only invited the Big Four to tender compared to 59% of companies with fewer than 10,000 employees.

When asked who they would consider if their current auditor ceased trading, FTSE 350 companies indicated they were much more likely to consider the Big Four.

In terms of audit fees, 26% of FTSE 350 companies spent between £1m-£5m on audit annually while 45% spend anything up to £500,000.

For 38% of FTSE 350 and 14% of other companies, more than 40% of fees went towards the audit of a company’s subsidiaries abroad.

Most FTSE 350 financial directors and chief financial officers said that a disagreement over non-audit services would not be a trigger to consider switching auditors, indicating that companies do not view the provision of non-audit services as a conflict of interest with audit.

The CC has so only published the findings of the survey and is yet provide its views on the information gathered.

The CC is expected to issue a final report into audit market concentration at the end of the year or early 2013.

Related articles

UK Big Four vigorously defend competition levels

PwC criticises stakeholder and mid-tier CC comments

Top Content

    Nigeria: building compliance and engagement

    Opportunities created by regulatory and legislative changes in Nigeria are tempered by the fragile state of the economy, although practitioners are generally confident that conditions will improve over the next few years if appropriate steps are taken. Paul Golden reports.

    read more

    Ghana: a quest for consistency

    Ghana’s current economic profile would suggest a fertile landscape for purveyors of accounting services. But inconsistent approaches to compliance and application of standards – coupled with problems in the banking sector and consequent liquidity constraints – have created a challenging environment. Paul Golden writes.

    read more

    Drone technology: audit takes to the skies

    The movement towards a digitised era has already impacted the auditing profession in a number of ways, from blockchain to artificial intelligence. Now firms are taking to sky and using drone technology in their audits. Mishelle Thurai speaks to Big Four firms to find out more.

    read more

    SBC: a new alliance joins the market

    Jonathan Minter speaks to Paul Tutin, chair of founding firm Streets Chartered Accountants, about why the business and its European partners took the decision to launch their own association.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.