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September 23, 2014

Spanish profession demands end to anti-competitive practices in audit tenders

In light of the implementation of the European audit reform, the Corporation of Auditors of the Council General of Economists (Corporación de Auditores del Consejo General de Economistas or REA+REGA), one of the two Spanish accountancy professional bodies, has called for the removal of anti-competitive clauses in audit tenders, which it said hinder the prospects of smaller auditors to win contracts.

Speaking at a REA+REGA conference of small audit firms last week Ana María Martínez-Pina, the president of Spain profession’s regulator, the Institute of Accountancy and Audit (Instituto de Contabilidad y Auditoría de Cuentas or ICAC) announced that legislative changes to implement the European audit reform in Spain are underway.

"This represents a great opportunity to reform the audit sector and promote market competition," the REA+REGA president Carlos Puig de Travy said.

At the conference held in the Southern city of Almería, the REA+REGA raised awareness about anti-competitive practices observed in audit tenders, such as requiring unreasonable high revenues to compete for audit contracts.

The REA+REGA offered the example of a state-owned local transport company, in which only audit firms with revenues of €25m ($32m) were able to compete for a three-year audit contract worth €75,000.

Another example in the public sector is that of Correos, the national postal services company, which required auditors to earn over €50m in revenues to bid for the contract.

Under these terms only the Big Four firms, with revenues ranging from €525m to €292m, could be able to compete in such tenders.Among the mid-tier, just six networks with revenues between €82.6 and €26.2m could participate: BDO, Grant Thornton International, AUREN, Mazars, Crowe Horwath International and Moore Stephens International.

"Such a discrimination of auditors based on revenues is unacceptable," the Council General of Economists president Valentín Pich said, who added that the professional body is scrutinising forthcoming tenders.

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