Senior UK finance executives have called for greater competition in the audit market in one of the final sessions from the House of Lords economic affairs committee inquiry into audit market concentration.
When members of the Lords committee expressed concern over audit rotation, executives said they stay with the same auditor because knowledge auditors have of their sector, the international reach their auditor has and fear of losing valuable insight if they change.
Firms among the FTSE 100 change their auditor, on average, every 48 years, but some maintain they would like to see another company compete with the Big Four firms.
Energy giant BG Group finance director Ashley Almanza said the company would not like to see the market of Big Three but would welcome the existence of a Big Five.“I don’t see any one stopping mid-tier from consolidating and increasing investment and becoming a big international network,” Almanza added.
While executives support a new large market player, they were on the whole dismissive of the suggestion to have auditors appointed by an independent regulator as proposed in the recent EC Green paper.
The executives said this would bring additional risk to their business, claiming company boards should appoint their auditors.
They also expressed general concern over increased regulation in the audit market. One executive expressed concern the market will have several regulatory regimes especially as a result of the EC green paper. “I think more regulation would be an issue. We also believe there should be more work done in joining UK and European regulatory standards,” the executive said.
The Lords inquiry into audit market concentration is on-going and the committee is expected to give its final opinion before the New Year.
Senior executives at this weeks session were: BG Group finance director Ashley Almanza , Hundred Group chairman Robin Freestone, Shell Finance Division EVP controller Martin ten Brink and British Land finance director Graham Roberts.