Davies on a big deal for accountants

There has been surprisingly little public reaction to the announcement that Hank Paulson has asked Arthur Levitt, a former Chairman, and Don Nicolaesen, a former Chief Accountant of the SEC to look at the structure of the audit profession. Yet I suspect the Big Four are reviewing their Washington lobbyist contracts, and gearing up for a fight.

Last Updated: 31 Aug 2010

At last, the US administration is taking the issue of audit concentration, and lack of competition, seriously.

We, and the accountants, have the Financial Reporting Council here to thank. For the last couple of years CEO Paul Boyle has fought a lonely battle to focus attention on the structure of the industry post- Arthur Andersen. Initially he was fobbed off, but at last others are realising that there is a problem. For many big firms, competitive issues mean they effectively have no choice of auditors. This cannot be a healthy situation. And everyone acknowledges that none of the Big Four could be allowed to disappear. That is hardly good for competitive discipline and cost-efficiency.

But of course it is hard to make progress in London alone. The Robson Rhodes/Grant Thornton deal may help, but even they will find it hard to break into the FTSE 100 without some external pressure.

So the Levitt/Nicolaesen review could be a big deal for the profession. If the US decide there are serious competition issues to address, the structure of the industry might have to change very fast.

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