Competition Commission Update

THE AUDIT REFORM DEBATE CONTINUES

There are some game-changing opportunities being discussed in the Public Policy arena with regards to the reform of the audit market. More and more questions are being asked about whether the set-up of the market is fit-for-purpose today and, importantly, tomorrow. At BDO, we think this is a much-needed debate, and we welcome that both the European Commission and UK’s Competition Commission are investigating this issue.

Here in the UK and led by BDO Partner, James Roberts, we attended a hearing with the Competition Commission in February. We tabled our view that the larger company audit market does not work effectively and causes harm through adverse effects on competition. While these factors persist, we believe the market operates to the detriment of businesses, investors and the wider economy. A more competitive market would encourage, facilitate and reward more innovation, which would in turn increase customer choice and audit quality. 

The Commission is continuing its investigation over the summer. Whilst there is no magic bullet to resolve the negative effects on competition that are currently evident in the audit market, we hope they will see that a carefully constructed package of remedies could make a very substantial difference.

Looking beyond our own shores, the European Commission continues to review the findings from a report by the Internal Market Commissioner, Michael Barnier. Though we fear that the proposals will become more diluted over time, we are working with our BDO International colleagues to participate in and influence the debate.