Monday, December 5, 2011

EU shake up Audit Market: Accounting Software users' Revamp Operations

The £600 million audit market is now under scrutiny as it faces a major shake-up.

As authorities attempt to make improvements on standards across the board, some of the audit industry's largest users of software for accounting may soon be asked to reorganize their operations.

With city firms, large companies and smaller accountants who have been using accounting software for small businesses have been expressing their concerns for several years of the "Big Four" - PwC, KPMG, Deloitte, Ernst & Young – and their stranglehold on one of the most important cogs of corporate British life. Michael Barnier, internal market commissioner at the European Union has told the “Big Four’ that splitting their European bodies could be the key to an upturn in quality and opening up of the market.

EU market commissioner Barnier will publish a draft law which, if approved, could result in the splitting of the “oligopolistic” networks of KPMG, PwC, Ernst & Young and Deloitte which check the books of nearly all blue chips in the world.

It is thought that the separation of the audit and consulting arms of each business may bring about an improvement in standards when it comes to working with accounts.

The proposal of Minister Barnier came soon after his plan of forcing the large firms to share their workload with smaller companies was shelved.

Rivals, such as Grant Thornton, BDO, Mazars, RSM and Rodl & Partner, have welcomed Barnier's aim of opening up the market.

Meanwhile, Barnier’s other idea of making it compulsory for organizations to change their auditor every six years has also been backed.

However, the Office of Fair Trading suggestion that the present state of affairs is damaging the economy was noted to be a serious accusation at a time when Britain is in danger of slipping back into recession.

Jean Stephens, chief executive of RSM International, even told newspaper that it is important that Mr Barnier does not allow his plans for improvements to the accounting market to be "watered down".

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