A Guide to Joint Audit
There is now unanimous agreement that the overwhelming dominance of just four firms in the global audit market is unsustainable and that reform is required to go from “four to more”. Unfortunately, and even though it is still in its early stages, there are clear signs already that the 2014 EU Audit Regulation and other interlinked initiatives are not going to achieve their desired objectives of reducing market concentration, increasing competition and improving audit quality.
We are therefore reaffirming our longstanding support for joint audit as a fundamental part of any package of measures to be considered to remedy the current state of play.
If we are to create a vibrant, innovative audit market meeting the needs of shareholders, other company stakeholders and wider society into the middle of the 21st Century, we must kick-start the creation of a competitive market in a manner that will ensure new entrants become auditors of large Public Interest Entity (PIE) companies.
We have to demystify joint audit and challenge the urban myths around it. It is a tested and proven mechanism to facilitate the emergence of new players and, in the case of France, has already led to creating the least concentrated audit market of any major economy. If undertaken in the right spirit of collaboration, we believe joint audit also reinforces governance arrangements on the conduct of audits and delivers real improvements in audit quality.