According to recent data from the Competition Commission, 83 per cent of FTSE 350 companies that changed auditors recently chose another Big Four Company, while 97 per cent of all switches have been to or among the Big Four.
This means that only four firms in the UK carry out an overwhelming majority of listed company work, which led to a referral by the Office of Fair Trading (OFT) last October.
And 90 per cent of non-FTSE 350 companies also stayed with the Big Four when switching auditor, although the non-FTSE 350 companies polled were more likely to put their audit out to tender than the FTSE 350 ones.
Of those who changed auditors, around 50 per cent said that the switch led to a decrease in audit fees and 64 per cent said that it led to an improvement in the quality of their audit.
The survey also found that Big Four-only tenders were linked to the company’s size. Seventy per cent of companies with 10,000 or more employees only invited the Big Four to tender, compared with 59 per cent of companies with fewer than 10,000 employees.
And when asked who they would consider if their current auditor ceased trading, FTSE 350 companies indicated they were much more likely to consider the Big Four.
Most FTSE 350 financial directors and chief financial officers said that a disagreement over non-audit services would not be a trigger to consider switching auditors, indicating that companies do not view the provision of non-audit services as a conflict of interest with audit.
Cost doesn’t seem to be an issue, as 45 per cent of the FTSE 350 companies polled will spend anything up to half a million pounds on an audit, while 26 per cent currently spend between £1m and £5m.
As an accountant, Nigel Fry, specialises within the audit and accounting sector.