BDO Australia has urged regulators to follow
the EC’s lead on considering market intervention to improve choice
and competition in the audit industry.

In most countries, the Big Four audit most of
the largest listed companies and the EC has put forward several
proposals to dilute market concentration. This has been followed by
a joint statement from some of the largest global firms outside the
Big Four – BDO, Grant Thornton, RSM International and Mazars –
which calls for market intervention to help the second tier firms
compete more successfully for large company audits.

Audit reform is a hot topic in Europe but it
is yet to gain much traction in Australia. BDO national chairman
Tony Schiffmann said the EC’s consultation should serve as a
“wake-up” call to national authorities, including the Australian
Securities and Investment Commission and Australian Competition and
Consumer Commission.

“Australia was fortunate to avoid the worst
impacts of the global financial crisis, but it is no reason for us
to be complacent about the most important tool we have to assess
the financial strength of companies,” he said.

Schiffmann would like to see audit market
authorities consider:

  • A ban on lenders and insurers stipulating the
    use of Big Four firms for audit and other services in
  • Introduction of rules that require audit
    committees to regularly reassess audit appointments
  • Consideration to joint audit firm
    appointments on top 100 listed companies
  • ACCC review of Big Four acquisitions of
    smaller firms to prevent consolidation of audit and other
    accounting functions
  • A debate about rotating auditing firms for
    large companies

In Australia, BDO is the sixth largest firm
and nearly quarter of the size of Deloitte, the smallest of the Big