ACCOUNTING - AUDITING

Competition in the UK Audit Market





Introduction3

Background to the Report3

Barriers to the Entry4

Step in the Right Direction6

Lack of Competition7

Regulations Beginning to Happen8

Increasing the Overall Regulations9

Professing Responses to the Competitions Commission Proposals9

Steps and Initiatives taken by the Competitions Commission9

Credibility of the External Stakeholders11

Ensure Audit Quality and Competition11

Effects of These Stipulations11

Increasing the Chances for the Entry of Middle Tier Auditing Firms12

Protecting the Interest of the Shareholders13

Conclusion14

Competition in the UK Audit Market

Introduction

When one talks about the overall structure of the accounting networks, it is pretty evident that there are four large firms that are working hard to make sure that they are providing auditing service to some of the largest clients in the world. The fact of the matter is that when there is need to make sure that some of the smaller firms are also getting the fair share of the revenue and profit, the market must work in a manner that that the firms cannot dominate and there should not be any entry barriers in the overall market (Bushman & Landsman, 2010, p. 260). To make sure that it is happening, there is a need for certain propositions that can improve the overall structure of the market. There is still room for debate that there is need for outside interventions in the market. There is also a point of view that these organizations are so depended on Big Four firms as the quality of the service that is provided by these firms is pretty decent.

Background to the Report

Under the Companies Act, FTSE 350 companies must keep adequate accounting records and the directors of a large company must not approve the accounts unless they are satisfied that they give a true and fair view of the company's financial position. The accounts must be audited and external auditors must give either an 'unqualified' report (ie that the accounts are presented fairly in all material respects and in the auditors' opinion give a true and fair view of the financial

State of the company or a 'modified' report. A modified report may contain either 'an emphasis of matter' (which does not affect the auditors' opinion) or matters which do adversely affect the auditors' opinion. The duties of auditors are owed to the company in the interests of the shareholders. Analysis of the Recommendations by Competition Commission. As soon as the recommendations were proposed by Competition Commission, there has been many reactions to the whole thing that whether it was something that was necessary and do these regulations would be able to bring some necessary overhaul in the financial market is working at the moment (Bonaci & Strouhal, 2011, p. 18). Thing that has to be kept in mind is that one has to listen to both sides of the argument before determining the merits or demerits of these propositions. First thing that is pretty much obvious is that the level of completion that is present at the moment in the United Kingdom market is something that is not very ...