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.
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