EU audit market reform falls short of expectations

Author: Amélie Labbé | Published: 28 Jun 2017

A structural reform of the EU auditing market launched a year ago hasn’t yielded the expected results, with the so-called Big Four accounting firms still dominating the landscape.

The EU regulation on audit reform, which came into effect in June 2016, two years after it was introduced, aims to shake up existing relationships between the larger companies and their go-to auditors. It compels those companies to put their statutory audit out to tender every 10 years at least, and change auditor every 20 years. Figures put the value of contracts initially expected to change hands at £10 billion ($12.8 billion).

But market participants now believe this may not entirely have had the desired effect of creating a more consistent market in the EU.

"The regime favours those larger accounting firms that have a panoply of compliance procedures in place," said Michael Butler, partner at Moore Stephens. "The reform...