“Although we believe that audit quality remains the key issue, we do agree that enhanced resilience and increased competition and choice at the top of the market is a good thing, so we’re pleased to see more FTSE 350 audits being carried out by firms outside the Big Four.
“The government’s White Paper on audit reform contains a number of ideas for opening up the market further, notably the introduction of managed shared audit, but this will take years to make a difference. We think that a market share cap would be a useful additional measure and significantly speed up the process. Even then, other interventions might also be necessary, for example, in the area of auditor liability, which is a big barrier to entry for challenger firms.
“As government considers its next steps, we hope that the establishment of ARGA, the new regulator, will be their top priority, and that they focus its remit on improving audit quality and building capacity in the sector.”