UK: BIS on auditors and concentration in the audit market

The Department for Business, Innovation and Skills has published its submission to the enquiry being conducted by the House of Lords Economic Affairs Committee with regard to the role of auditors and market concentration in the audit market: see here (pdf). The submission makes for interesting reading. For example, the Government states:

... there is value in a debate about the extent to which audit should be mandatory, and what the nature of any mandated audit should be. The Government’s view is that audit has an important but not unique role to play in ensuring vibrant capital markets. It is less clear that a modern audit, designed largely for listed companies with diverse shareholders, should necessarily be imposed on, for instance, a medium sized owner-managed company ...

The Government’s view is that while there is no evidence of systematic problems of auditor independence, the body best placed to bolster auditor independence is a strong audit committee ...

[The] Government’s initial view is that, with the current (four-player) state of the audit market, it may be difficult to identify measures that will be effective in increasing choice for the largest audits without also imposing major costs. Those costs might be hard to justify".