Competition and choice in the UK audit market
April 2006
Concerns about the Big Four audit firms—Deloitte & Touche, Ernst & Young, KPMG and PwC—dominating large-company auditing have been widespread in recent years. This six-month study provides an in-depth market analysis of audit services supplied to UK listed companies, with a focus on the auditing of FTSE 100 and FTSE 250 companies.
We examined in detail the process of auditor choice, the evolution of the market structure, the consequences of high concentration for choice, the implications of limited choice for competition, and the relationship between concentration and audit fees. We also analysed the prospects for market entry by mid-tier firms, and the implications for effective market operation of the hypothetical exit of a Big Four firm.
Our analysis—based on 67 interviews drawn from all stakeholder groups, a survey of 50 audit committee chairs, and extensive statistical and financial modelling—forms the starting point for a consultation led by the FRC to address the public interest issues highlighted by Oxera’s research.
The related press release for this report can be found here.
If you would like to download a copy of the report's executive summary, please click here.
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We examined in detail the process of auditor choice, the evolution of the market structure, the consequences of high concentration for choice, the implications of limited choice for competition, and the relationship between concentration and audit fees. We also analysed the prospects for market entry by mid-tier firms, and the implications for effective market operation of the hypothetical exit of a Big Four firm.
Our analysis—based on 67 interviews drawn from all stakeholder groups, a survey of 50 audit committee chairs, and extensive statistical and financial modelling—forms the starting point for a consultation led by the FRC to address the public interest issues highlighted by Oxera’s research.
The related press release for this report can be found here.
If you would like to download a copy of the report's executive summary, please click here.
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