Parliament proposes end to oligopoly of big four audit firms – comments by Sharon Bowles MEP

The European Parliament's Legal Affairs Committee today voted to radically reform the way in which Europe's largest firms are audited.

Sharon Bowles MEP played a key role in ensuring the mandatory rotation of audit firms and supported a new requirement that auditors can only audit large public interest companies for a maximum of 25 years.

Parliament also adopted Ms Bowles' suggestion of putting all consultancy work out to tender, ensuring greater competitiveness among audit firms. However, there is no cap on the level of non-audit services an incumbent auditor can provide.

Speaking from Brussels after the vote, Ms Bowles said:

"Since the financial crisis, the role that auditors play in cross-checking companies' accounts has come into sharp focus, as well as the market dominance the big four audit firms have across the EU.

"The proposals voted on today seek to end the oligopoly of the big four accounting firms, which enjoy a lion's share of the market.

"While the maximum period of audit engagement is too long, companies will now need to put the audit out to tender at least once in this 25 year period. Such tendering tends to force significant elements of review by the audited company.

"The UK Competition Commission's year-long review into the UK FTSE 350 found severe deficiencies in auditor's motives and their proposed remedies were very similar to my own.

"I am relieved that the Parliament has taken these ideas on board even if it is far too long a rotation period. I do fear, however, that this is an opportunity of a generation lost."

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