Major Audit Firms on the Shakeup
Regulators of the audit industry will implement major changes in the market of audit firms before 2011 ends to clean up the tainted name of the profession, said Internal Market Commissioner Michel Barnier during an event in Brussels late last week.
The European Commission’s call to effect a shakeup among the audit firms later this year has invited commendations from the four key players in the audit industry other than the Big Four.
Prior to the Brussels event, RSM International, BDO, Mazars and Grant Thornton issued a joint statement expressing their nod on the European Commission’s overhaul plan.
In the joint statement, RSM International CEO Jean Stephens, Mazars Chairman and CEO Patrick de Cambourg, BDO International CEO Jeremy Newman, and Grant Thornton International CEO Ed Nusbaum have written that their firms support the calls to overhaul the audit market.
According to the top executives of each firm, the EC’s plan will bring about improvements to the quality of services of the audit firms, taking into account the lessons from the recent global financial crisis.
Barnier told the audit firms the plan to overhaul the market addresses “real needs” which cannot be ignored, as quoted by Compliance Week. He said independence is a must these days.
Europe’s audit market is presently concentrated by the Big Four audit firms – Deloitte, PwC, KPMG, and Ernst & Young – which have been recently grilled by the House of Lords Economic Affairs Committee November last year for their role in the 2008 crisis.
Seeing the inefficiencies caused by market concentration of the Big Four, the other four audit firms have proposed to create a single audit market to enhance the competition within the industry and enhance auditing services.
Meanwhile, Barnier said he wanted to put a ceiling on the share of audit firms in which one company can simultaneously hire two auditors, one coming from the Big Four and the other at least from the other audit firms.