Accountancy firms will be allowed to bid for public companies' audit work every 10-years, the Competition Commission has ruled.
The Commission said that opening the market for listed companies’ audits regularly would help to reduce the dominance of the big four accountancy firms, improving competition.
The change is expected to be introduced in the last quarter of 2014.
Deloitte, Ernst & Young, KPMG and PwC audit the vast majority – about 90% – of the UK’s biggest publically-listed companies.
Firms will also no longer be permitted to limit those who bid for its audit work to just the big four accountancy firms.
Laura Carstensen, chairman of the Audit Mark Investigation Group, told the BBC, “Our measures will deliver lasting change in a market where currently a major company putting its audit out to tender remains unusual enough to be a news story.”
The audit industry came under fire for inadequate action before the financial crisis to raise concerns about company balance sheets, which in many cases were over -leveraged, and missing high levels of risk in banks’ books.
Separately, the European Union acknowledges the stranglehold of big audit firms and is proposing mandatory switching of auditors or more curbs on their advisory work.
