This view is particularly prevalent among finance directors and chief financial officers who are increasingly frustrated by the lack of choice in firms with the capacity to audit large multinationals.
But those who are not quite as close to the day-to-day process of auditing, such as investors, believe that the Big Four dominance also exacerbates the problem of auditors’ independence.
According to the YouGov research which was carried out for the Financial Reporting Council, “Overall there is a fear that four firms with the capacity to audit large multi-national companies is too few and presents the risk of becoming three if one firm fails.
“No one expresses any concerns about the competence of any of the firms, which is seen to be very high. There is perceived to be a large gap between the Big Four and other audit firms in terms of global reach which significantly reduces choice for many multinational companies.”
The research also shows that the closer to the audit process stakeholders are, the more they are likely to trust the outcome and less likely to want to see large-scale reform. So, while those closest are aware of a public expectation gap about audit, they will see this is a failure in communication rather than anything intrinsically wrong with the process.
A second – and the largest – group of stakeholders, which covers investors among others, are generally content with the audit but have serious concerns about the quality of auditors, their independence and how they deliver services.
As a result, they are more likely to support policy interventions that aim to increase the independence and transparency of the audit process, such as mandatory rotation, mandatory retendering and limiting non-audit fees.
A third category of stakeholders (largely journalists, politicians and academics) had the lowest confidence in audit, partly because they thought it should be performing a much more significant public interest role by protecting the public from failing institutions.
They see the problems with audit as structural and are therefore more likely to call for more drastic intervention, such as removing the statutory basis of audit, external appointment of auditors and audit only firms.
The research was carried out last year and involved interviews with 36 stakeholders covering, politicians, civil servants, regulators, bankers, investors, journalists, academics, audit firms accountancy bodies, businesses, business organisations, audit committee chairs and NGOs.