Competition Commission Releases Paper on FTSE 350 Auditing Trends
The CC (Competition Commission) has issued a paper on the manner in which FTSE (Financial Times and London Stock Exchange) companies should select an auditor as well as the triggers, which may lead them in switching. The paper that forms an essential part of it review of the United Kingdom auditing market also revealed that in most of the cases, the auditing entities got FTSE 350 related contracts by simply engaging in tenders that were competitive. However, tenders weren’t very frequent as only four percent of FTSE 350 entities participated every year.
The paper also revealed that KPMG, Deloitte, Ernst& Young and PwC (Big Four) auditing entities are two times more likely to get invitation for tender in the form of mid-tier contenders. Meanwhile, the price of engaging in tenders is peeking.
The paper disclosed that most of the entities switch each year and 3.3 percent of FTSE 350 entities did that between the years 2000-2011. The tenure on an average was eleven years, at least 2 years shorter in comparison to that of the FTSE 100 entity’s tenures.
The Competition Commission also found that the Big Four approached FTSE entities in search of new auditing business regularly. KPMG and PwC approached entities more actively as compared to Deloitte. On their other hand, their small-sized competitors rarely approached entities and showed interest only when they were asked to engage in a tender process. Mazars, Grant Thornton and PKF stated that they showed no interest in submitting statutory auditing related bids since they were not sure of achieving success.
During the process of analyzing the data and information provided by the audit entities, the Competition Commission came to a conclusion that on an average only four percent of FTSE 350 entities participated in tender process every year. When questioned why entities could not win a tender, the common reply given by 21 percent entities was ‘not much experience’.
On matters pertaining to recognizing auditing fees, entities stated it was down to the fee amount of last year. KPMG, Deloitte, Ernst& Young, PKF, Mazars, Grant Thorton and PwC all stated that the auditing fees level wasn’t ever linked to the provisioning of non-auditing services.
- AIM-listed Mining Company GoldStone Switches Auditor
- New Study Reveals 55% of Public Believe Auditors’ could Prevent Company failures’
- FRC Hands KPMG a £5m Fine over Co-Operative Bank’s Audit Failings
- IAASB Consults on Simplifying Auditing Standards for Small Entities with Less Complexities
- Anglo American Replaces Deloitte with PwC as its External Auditor
- SEC uncovers $20m Accounting Fraud at Celadon Group
- Deloitte Resigned as Ferrexpo Auditor over Concerns Regarding Misappropriation of Charity Funds