David York, ACCA Head of Auditing Practice explained: 'In our response to an OFT consultation, we supported its preliminary decision to make the referral as action is needed to increase competition.
'The issue of concentration in the market for statutory audit services to large companies has been debated over the last decade both in the UK and internationally. ACCA, as a global body, has provided evidence and views in relation to many of the initiatives in this regard. Our position paper Audit under fire: a review of the post-financial crisis inquiries, summarises our views on mechanisms to increase audit competition.'
Looking forward, David York continued: 'We do not believe that it is appropriate to intervene in the market by downsizing or restructuring the Big Four audit firms, nor by artificial intervention into the market, such as putting ‘caps’ on the number of audits that any one firm can carry out. Companies must have a right to appoint auditors of their choice and the long-term answer must lie in persuading directors and investors that their best interests are served by a healthy competitive audit market.'
Mr York concludes: 'It will be important to keep the current UK and EU initiatives in step. For example, in one area we advocated, addressing the need for action on banks’ restrictive covenants, which are directly anti-competitive, and to limit auditors' liability.'