RSS feedsInvestors have warned the profession not to use the government’s report on audit competition as an excuse to drive liability reform, ahead of a crunch meeting next week called by the Financial Reporting Council.
Some key institutions will not be able to make the Wednesday meeting, which has been tabled to discuss the findings of the government’s report into the audit market, Accountancy Age can also reveal.
‘The meeting will determine whether the issue is tackled substantively or just another excuse to drive liability limitation,’ said Iain Richards, head of governance at Morley Fund Management.
‘Proposals that help shore up an unacceptable position wouldn’t do anything for shareholders,’ he said.
Richards added that Morley itself, alongside other investors, would not be able to make the meeting.
The report has underlined concerns held by investors and other stakeholders about the dominance of the Big Four in the audit market.
One area that is attracting attention is the fact that standards setters are often drawn from the Big Four.
The report said: ‘Several investors that Oxera interviewed raised concerns about the structural links between the Big Four via institutions that regulate audit and accounting, complaining that the influence of the Big Four on rules-setting has led to an audit product which does not meet the needs of investors, and which benefits the Big Four, to the possible exclusion of the mid-tier firms.’
‘We have got some real structural problems,’ said one investor.
The European Commission, the World Bank and the SEC are all thought to be concerned about the issue.
One area highlighted by investors is the influence of IFAC on international standards, which many companies have found both expensive and troublesome.
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