Projected ‘managed shared audit’ plan costs to break Big Four dominance grow to £1bn
The estimated costs of the proposed plans to break up the stranglehold of Big Four accounting firms over the auditing business have been predicted to grow to £1 billion over 10 years, according to government figures.
The ‘managed shared audit’ proposal would require FTSE 350 companies audited by a Big Four firm to hire a smaller firm to do a portion of the work. The £1bn figure ballooned from last year’s estimate of £210 million.
Based on analysis by Audit Analytics the increased costs of around £100m a year works out to 8% of total audit fees paid by FTSE 350 companies in 2021, the Financial Times reports.
The proposal in its current form has been opposed and questioned by the Big Four firms, and challengers BDO and Grant Thornton — who are set to benefit — have suggested they may prefer to win more auditing contracts on a solo basis rather than participate in the shared arrangements in the current proposal.