CMA may exclude major firms from joint audit rule

The Competitions and Markets Authority (CMA) may exclude the sector’s biggest firms from a new rule which could require businesses to appoint joint auditors.

The CMA is expected to publish its final report following its inquiry into the audit sector this week, and in December it faced backlash from corporate businesses to proposals it outlined which suggested FTSE 100 firms would be forced to employ two audit firms.

According to Sky News, a source close to the regulator said it may exempt “the biggest, most complex companies” from the rule including HSBC, BP and Shell. However, one source said a “crude market capitalisation threshold” may apply due to the “potential impact on companies crossing such a threshold in either direction or on multiple occasions”.

The overall aim of the CMA’s inquiry is to boost competition in the market which is dominated by the Big Four audit firms; PwC, EY, Deloitte and KPMG.

It is not yet known if the exclusion will be written out in the CMA’s final report.

Earlier this month, the Business, Energy and Industrial Strategy committee called for a breaking up of the Big Four’s audit and non-audit services as part of its own review into the sector.