Having a Big Four market is risky and more
should be done to increase and encourage market competition the
House of Lords Economics Affairs Committee was told by a
non-executive this week.
Aviva non-executive and former KPMG chairman
Lord Sharman said there is a big problem with a lack of auditor
choice as companies are often faced with making a choice among two
of the Big Four due to conflict of interest with non-audit services
and independence issues.
“I think we need to encourage mid-tier firms
to grow. In my opinion, Arthur Anderson should have been absorbed
with a mid-tier firm rather than PwC, which would maintain the
market of a Big Five. I think there is a problem with having a Big
Four market, however, there is no clear solution to it.”
The opinions of Lord Sharma and other
witnesses are inline with the recommendations made by senior UK
finance executives who called for greater competition in the audit
market last week.
The Lords were also told by the mid-tier a few
weeks ago that intervention is needed in order to increase
competition.
The next meeting of the committee will be held in January.
