BDO UK has said introducing joint audits to the statutory audit market would increase bureaucracy and take years to implement properly, following the UK’s Competition and Markets Authority’s (CMA) proposals to increase competition in the market.
In addition to these objections, a BDO spokesperson told the IAB that joint audit would reinforce the view of businesses and the CMA that there is a division of skills between the Big Four and challenger firms which BDO does not believe to be the case, commenting “size is not a proxy for quality”.
Despite BDO’s objections, the network said that it would cooperate with the CMA were it to pursue this option, but its preference would be for audit caps.
BDO UK’s head of advisory Gervase MacGregor told The Times that market caps would ‘improve quality and effect change more quickly than any other measure’.
The CMA revealed its initial proposals to reform the statutory audit market in December 2018 and proposed a range of reforms including the introduction of joint audits, greater separation between audit and non-audit work, and greater scrutiny of auditor appointment.
It noted that if there are concerns over the effectiveness of joint audits, introducing a market share cap could be an alternative option for creating long-term choice in the market.
The proposals of joint audits was widely unpopular with both accountancy firms and institutes. The Association of Chartered Certified Accountants (ACCA) expressed concern that there is not enough evidence demonstrating a positive impact on audit quality from the proposals of joint audits or a separation of audit and consulting within firms.
The CMA set a deadline of 21 January 2019 for responses to its initial proposals which it released just over a month before the deadline. It is expected that these responses will become publicly over the course of the next couple of weeks.
While joint audits have been widely opposed, the vast majority of firms have acknowledged the need for reform within the statutory audit market and expressed a willingness to work with the CMA to bring about positive change within the profession in order to improve audit quality and regain public trust.