Gavin Hinks, Accountancy Age, Tuesday 27 July 2010 at 11:27:00

Economic affairs committee will examine the dominence of the Big Four andwhether auditors should have done more in the crisis

The audit market is to come under the scrutiny of the House of Lords whichwill look at the domination of the Big Four and whether auditors should havedone more ahead of the banking crisis.

Lord MacGregor, chairman of the Lords economic affairs committee, said: "Theauditing industry has been dominated by a very small number of players for sometime now. We will look at the scope for promoting more competition."

The competition issue is already on the agenda of the Financial ReportingCouncil and has been examined by the House of Commons Treasury committee.

A recent report from the FRC and FSA criticised the role of auditors duringthe crisis saying they had failed to tackle management bias.

The Lords investigation will look at basic questions such as wether Big Fourdominance increases the price of audit and whether the market needs to be openedup.

But it will also examine much more sensitive issues about the audit of banksand whether the auditors were sufficiently sceptical in the run up to thecrisis, and could they have done anything to mitigate the crisis.

The Lords are inviting responses to the probe by 24 September.

Read more:

NewFSA powers will force auditors to speak out

Treasurycommittee accuses auditors of "tunnel vision"