Mazars, a leading audit firm outside the “Big Four”, has welcomed today’s provisional findings from the Competition Commission that the FTSE 350 audit market is not serving shareholders and that competition in it is restricted.
David Herbinet, Mazars’ UK head of public interest markets, who has been leading the firm’s input to the Competition Commission’s inquiry, commented: “We applaud the Competition Commission’s findings and, in particular, the emphasis on the primacy of the auditors’ duty to shareholders.
“We’ve been active in this debate for the best part of the last decade and the Competition Commission deserves praise for its study: it’s the most thorough and independent inquiry ever into the FTSE 350 audit market in the UK and reflects the situation of most other national audit markets.
“It’s clearly going to make a significant contribution in Brussels as the European institutions decide the way forward on the future shape of the EU audit market.”
He added: “The findings are a resounding indictment of the current state of the FTSE 350 audit market. We note the Competition Commission’s conclusion that the ‘lack of competition is likely to lead to higher prices, lower quality, and less innovation for companies and a failure to meet the demands of shareholders and investors’.”
Mazars believes that a more open, vibrant and resilient market can only be achieved through a balanced package of reforms that leads to additional players winning significant market share within the next three to five years, including at the top end of the FTSE 100.
“No one can deny now that a major programme of reform is required as an urgent matter of public interest. The status quo is not an option. The key objective of reform must be to create a level playing field amongst the various firms with the capability to audit FTSE 100 and FTSE 250 companies. It is vital that all the key players – investors, boards and audit firms – work together to come up with viable and forward looking solutions,” said Mr Herbinet.
Mazars is of the opinion that, in addition to the primary list of potential remedies established by the Competition Commission, full consideration should also to be given to restrictions on non audit services and the potential contribution of co-audit.