DELIBERATIONS are taking place at the Office of Fair Trading over whether to refer the audit market to the Competition Commission.

The proceedings are being kept under wraps, but some small clues could indicate the way the investigation is heading.

Firms have been asked not to discuss their meetings with the watchdog; the reason for this is unclear, and the OFT has refused to reveal which firms it is holding discussions with.

Obvious candidates such as the Big Four, institutes and business groups are definitely on the list, but beyond that, the details are murky. Precisely why the OFT won't divulge its contacts is unclear, but perhaps they fear accusations that its discussions are too narrow; after all, you can't please everyone.

The investigation comes as a result of an appeal by chancellor George Osborne to investigate restrictive lending clauses, whereby banks force clients to use Big Four firms as a condition of borrowing. This was followed by strident calls from the House of Lords Economic Affairs Committee for a far-reaching inquiry, and the OFT has duly responded.

In true form, it has not decided to launch an inquiry immediately; instead, preliminary research is being done, after which the body will decide whether to investigate fully, and whether the Competition Commission - a more powerful organisation with an arsenal of serious sanctions - should be called in.

And so to the talks. As mentioned, the Big Four can be sure of an invite, and they have probably already had their deliberation, seeing as discussions began several weeks ago. Sources indicate leading mid-tier firms such as BDO and Grant Thornton have also been contacted by the watchdog, but after that, the pattern is lost.

PKF partner Richard Bint said over the last few weeks, he had not been contacted by the OFT, but the firm was planning to proactively provide feedback for the inquiry. By contrast, one of its smaller peers has been approached for its input, according to sources close to the issue.

Firms that have already met the watchdog said it was "made very clear" that the proceedings were private. Nevertheless, one mid-tier partner said they had been given "a good hearing" with "the appropriate amount of seriousness", suggesting equal weight will be given to the views of firms at all levels. Over the course of an hour and a half, four OFT representatives questioned the partners, and the discussion was "closer to a chat than formal proceedings".

A spokesman for the OFT confirmed that a series of roundtables is taking place, but said that content is not a public matter and the meetings will be concluded by the end of the month.

Back in May, the body said the terms of the investigation had deliberately been left vague to guarantee "an open and transparent process that does not accidentally exclude anyone".

While there have been talks with non-Big Four firms, which participants described as serious and positive, the fact that the OFT can only speak to selected mid-tier representatives might be worrying to some. There is no doubt it will collect the whole quartet of Big Four views, and these could prove more influential than the disparate voices of a few smaller firms.

Equally, it is possible business groups will have similar views to the Big Four, as their lack of enthusiasm for smaller firms is well documented, and it is unlikely they will push for a way out of their comfy long-term liaisons with largest auditors.

It may therefore be down to the institutes to steer the OFT in the direction of the Competition Commission, yet they are not necessarily unified in their opinions.

Reactions to the government's response to the Lords' audit report, published last week, hinted at the degree to which the institutes' views on market concentration differ.

While ICAS plumped for greater transparency in the audit retendering process, ACCA had little to say on the best way to break open the audit market, focusing instead on ways to boost quality. Meanwhile, the ICAEW made no mention whatsoever of competition or the OFT, preferring to concentrate on a defence of auditors' role during the banking crisis.

Those hoping the Competition Commission will be drafted in have just one factor on their side - the consensus that things must change. There is no doubt that firms, clients and institutes are hungry to move on from the calamitous financial crisis, and to draw a line under any inherent weaknesses exposed at the time.

This is illustrated by the Big Four's acceptance of the existence of banking covenants, something they have strenuously denied for almost ten years. In the same way, the institutes are clamouring to show their readiness to help firms navigate a path in the rapidly changing industry, while the mid-tier has never been so optimistic that their time has come. On this basis, though the OFT might be deafened by a chorus of conflicting voices, the option to do nothing simply does not exist.

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