* Tentative deal set to trigger relief among Big Four
* Vote is first key milestone to end months of deadlock
* EU states have joint say on audit reform
By Huw Jones
LONDON, April 24 Companies would have to change
their accountant every 25 years under a tentative deal ahead of
Thursday's committee vote on a European Union audit market
reform, two parliamentary sources involved in the talks said on
If endorsed, it would mark a big dilution in the draft EU
law and trigger relief among the "Big Four" accounting firms -
Deloitte, Ernst & Young LLP, PwC
and KPMG - who check the books of nearly all blue chip
If backed by the European Parliament's legal affairs
committee on Thursday, the change would still need support of
full parliament and the 27 EU member states to become law.
The reform has been deadlocked for months over whether and
how often companies should have to switch accountants.
Critics say there are too few accounting firms with the
breadth of experience to force a switch on a frequent basis.
Supporters say mandatory switching would encourage the next
tier of accountants like Grant Thornton, Mazars and BDO to
investing in more staff.
The reform is being closely tracked by the United States
whose audit regulator is also mulling a cap on tenure.
The original draft proposed a switch at least every six to
nine years to increase competition and stop auditors being cosy
with clients. Policymakers were angered that banks were given a
clean bill of health by accountants just before they were
rescued in the financial crisis.
"There would be no exceptions after 25 years," a
parliamentary source said on condition of anonymity. "It was
agreed as a last-minute compromise."
"There is a backstop agreed at 25 years," the second source
So far the deal has tentative backing of a majority of
committee members drawn from the main centre-right parties, the
Liberals and some from the left and nonaligned groups, the two
parliamentary sources said.
The Socialists, the assembly's second-largest party, do not
support the deal as they think 25 years is too long a tenure
though that position may evolve, the sources added.
Britain's Competition Commission is also deciding on how it
wants to increase competition in what it sees as Britain's
"sticky" audit market where companies had the same accounting
firm for many decades in some cases.
The UK already requires companies to consider a switch every
10 years or explain if no change is made, and the antitrust
watchdog will say in July whether switching should become
mandatory and if so, how frequently.