LONDON, Aug 18 (Reuters) - Britain’s top companies are reviewing early who checks their books ahead of new rules to increase competition introduced to counter concerns about accounting, figures from auditor PwC showed on Monday.
All listed companies have long had to hire an outside firm of accountants to sign off on their annual accounts.
But some companies, especially banks, have kept the same accountant for decades, raising concerns among regulators and lawmakers about cosy relationships between company and client.
The UK Competition and Markets Authority will introduce new rules later this year making it compulsory for the top 350 listed companies to put their annual audit out to tender every 10 years to give rival accountants a chance to offer an alternative service.
It hardens a UK rule introduced in October, 2012 requiring firms to re-tender after 10 years or explain why an accountant is being kept on longer.
But a new European Union law approved earlier this year will go a step further from 2016 to force listed companies across the bloc to actually change their accountant at least every 20 years.
PwC said a snapshot of tendering among Britain’s top 350 listed companies last month showed 56 likely tenders this year, up from 30 tenders in 2013 and 18 in 2012.
“Tendering activity is at unprecedented levels,” James Chalmers, UK head of assurance at PwC, said in a statement.
“Now that there is greater clarity on the implications of the EU rules, companies are able to make decisions on when to tender at a time that makes most sense for their particular circumstances,” Chalmers said.
Some companies and accountants have complained that tendering is costly and time-consuming but they failed to stop the rule changes. Meanwhile, signs of downward pressure on fees has cause some regulators to worry about audit quality.
There is no real sign yet that the stranglehold of the so-called “big four” accountants, PwC, EY, KPMG and Deloitte, is being loosened among the very big companies.
The big four still check the books of nearly all blue chips, though Grant Thornton has picked up two firms, replacing Deloitte at Interserve, and PwC at Bankers Investment Trust.
Auditor changes at banks, whose bail-outs in the financial crisis triggered regulatory scrutiny of the accounting sector in the first place, have seen a merry-go-round among the big four. (Reporting by Huw Jones; Editing by Robin Pomeroy)