Simon Michaels, Managing Partner, BDO LLP comments:
“We are pleased that the Competition Commission has confirmed that there are significant flaws in the structure of the FTSE 350 audit market.
“We have long been at the forefront of campaigning for change in this market, which has been characterised by a lack of choice for clients and investors and by restricted competition, potentially threatening the ability of audit to underpin the effectiveness of UK capital markets. The exposure of audit to the spotlight has led to increased questioning of its value as it now stands, particularly in the context of the financial crisis which originally drove events towards the Commission’s inquiry. We therefore particularly welcome the findings today.
“The Commission has identified a challenge to the audit profession in demonstrating that it is, and appears to be, independent from client management. This is a challenge we acknowledge and which requires careful thought prior to selection of remedies.
“The Commission has until October of this year to finalise its report and, in particular, to select remedies to correct the market defects. The remedies selected by the Commission need to be effective and comprehensive. No one solution will achieve market correction, but rather a combination of tendering requirements, encouragement of transparency and dialogue between auditors, companies and investors, and reform of outdated exclusionary practices should provide a backdrop for a healthier FTSE 350 audit market. These remedies have all been identified by the Commission.
“We believe such a market will value innovation, fundamental audit quality and exceptional service. This must be to the benefit of UK plc.”
Notes to editors
BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list of members' names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU. BDO LLP is authorised and regulated by the Financial Services Authority to conduct investment business.
The combined fee income of all the BDO Member Firms, including the members of their exclusive alliances, was $6.015 billion in 2012. The global network provides business advisory services in 138 countries, with almost 55,000 people working out of 1,204 offices worldwide.
BDO is the brand name for the BDO International network and for each of the BDO Member Firms.
BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, is licensed to operate within the international BDO network of independent member firms.
BDO LLP has a clear ambition to be the firm known in the market for exceptional service delivered by empowered people. The 2011/12 Mid Market Monitor analysis – completed in April 2012 – shows that BDO has now indeed become market leader for client satisfaction – outperforming all its major competitors and the only organisation to see an improvement over the past three years.
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