As reported in our last Update, the House of Lords began its inquiry examining the audit industry during the financial crisis and the concentration of the audit market in the UK on 12 October 2010. Discussions in December and January have included:
- Ashley Almanza, the Finance Director of BG Group and the outgoing Head of the Hundred Group of Finance Directors told the committee that regulators should prepare contingency plans to protect financial markets from serious disruption if one of the Big Four audit firms were to collapse. Almanza added that he would like to see more competition in the audit market and suggested that mid-tier firms could compete against bigger rivals by merging or forming networks.
- Financial Directors from a variety of companies informed the committee that being able to trust an auditor’s judgement and the accuracy of numbers in the annual report are more important to them than the price of audit.
- KPMG has submitted documents to the committee which demonstrates that the Big Four warned the Chancellor about the potentially catastrophic consequences for the UK economy if financial assistance to banks was not expanded. The documents show that on 11 November 2008 KPMG Senior Partner, John Griffith-Jones, wrote on behalf of the Big Four to the Chancellor stating that the announced measures following the collapse of Lehman Brothers were inadequate and warned of uncertainty spreading from one bank to the next.