John McManus has a column in today’s Irish Times which comments on the report produced by the UK’s Competition Commission last Friday on the so-called Big Four accounting firms – Deloitte, Ernst and Young, KPMG and Pricewaterhouse Coopers. The online version of John’s column omits a table referred to in the body of his piece, and it seems like a very useful piece of information, so it is being reproduced here. Separately the UK Competition Commission press release from last Friday is here and its report for the UK is here.
The Irish Times has a listing – not available online that I can see – called “Top 1,000 Auditwatch” which presumably shows the auditor of the Top 1,000 Irish businesses. And this is what the table below is based on. The second column, “volume” appears straight forward, for example PwC audits 219 out of the 1,000 biggest companies in Ireland. “Value” is more ambiguous and it is not quite clear what value relates to, audit fees or company revenues are two possibilities.
In Ireland’s case, we really have a Big Three – Deloitte has a relatively measly 10% by value. The UK Competition Commission has rejected the more serious of competition concerns, for example, that large audit firms were undercutting smaller firms, but there are concerns which will be further examined, that auditors place management above shareholders when it comes to prioritizing duties; this is rejected by the auditors, but it does have resonance with our experience of failed Irish banks.
In the UK, there is even more concentration than in Ireland. The figures below are extracted from John’s article so blame him for one set adding up to more than 100%!
Finally, it might be worth reminding you of the auditors of our banks during the boom.
You will find a feature blogpost on auditors here.