PwC UK has defended the level of competition among the Big Four and said Ernst & Young (E&Y) has set up a shadowing group looking to overtake PwC’s audit client Lloyd’s Banking Group, in submission to the Competition Commission (CC).
PwC UK told the CC that all of the largest audit firms are capable of providing audit services to all of the largest companies and that there is overwhelming evidence of this competition between the large audit networks.
As and example of competition PwC said Ernst& Young, that currently doesn’t audit any of the large high street banks, has set up a, “shadow audit team targeting Lloyds Banking Group”, which is currently a PwC client.
PwC said such shadow teams are common practice among the Big Four.
“There is a complete lack of recognition that each firm has its own commercial strategy and competes with the other large audit firms in the UK and, given that all four firms are members of global networks,” PwC said.
E&Y has not commented on PwC’s response to the CC.
The Office of Fair Trading referred the issue of audit market concentration and lack of competition to the CC for further investigation in October 2011, following the UK House of Lords Economic Affairs Committee audit market competition inquiry recommendation.
The Competition Commission is required to report on its findings by 20 October 2013, although the body said it will aim to complete the investigation in a shorter period.