Kevin Reed, Accountancy Age, Tuesday 2 November 2010 at 08:10:00

A fresh approach needed to audits: including scrapping statutory assurancefor smaller companies, BDO will tell a Lords committee

A root and branch overhaul of audit is required to bring assurance infinancial statements, according to BDO.

The firm will argue to a Lords committee on Tuesday afternoon that audits forsmall businesses and company subsidiaries should be scrapped, while regulatorsshould encourage investors and non-executives to consider hiring auditorsoutside of the Big Four.

TheLordsEconomic Affairs Committee will hear from BDO, Grant Thornton,Mazars and RSM Tenon for their views on audit market concentration.

BDO audit partner James Roberts pooh-poohed earlier reports that hadsuggested the firm would encourage government intervention to force auditorrotation. Instead the firm would prefer investors and company non-executives tobe persuaded to consider auditor options outside the Big Four firms.

?We don?t like the idea of government-style [audit] appointments,? saidRoberts, ?but audit committees directed to consider other firms.?

?The oligopoly is unhelpful. We hear general rumblings [from investors]. Wehave to get over the institutional prejudice.?

Only the largest banks, financial services firms and oil giants werecurrently out of reach of BDO?s ability to audit among the UK?s top companies,said Roberts.

Further reading:

Lordsenquiry: accounting fuelled banking crisis

Auditfirm division should be explored

Analysis:auditors prepare for major rule changes