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December 14, 2010

There are dangers in having a Big Four market: HoL

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.

 

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