Rivals to the Big Four are welcome

2 April 2014 From Mr Sacha Sadan and others.

Sir, Interserve, the FTSE 250 international construction and services company, announced  last week that it would replace its  longstanding auditor, Deloitte, with

“mid-tier” firm Grant Thornton. As long-term investors, we welcome the “fresh pair of eyes” this change will bring. We also applaud the decision as a sign of increasing competition in the audit market. The market for statutory audits has for too long been dominated by the largest audit firms. In its investigation into the audit market last year, the UK Competition Commission found that between 2001 and 2010 the Big Four consistently delivered more than 95 per cent of the FTSE 350 audits.

As the European parliament approaches its final vote to shake up the audit sector tomorrow, there will be more tenders. We would encourage all audit committees – including those for FTSE 100 firms – to ensure fair and open competitions that look beyond the Big Four.

At the same time, the new entrants have a “torchbearer’s” responsibility. They must demonstrate their capability to audit large and complex companies. The market is large enough for more than four players, but all must deliver the highest quality audits for shareholders.