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The cost of plans to break the stranglehold of the Big Four accountancy firms – by forcing companies to hire two sets of auditors – has risen to almost £1bn over 10 years according to latest government estimates, the Financial Times has reported.
The cost of the “managed shared audit” proposed was estimated to be in the region of £210m last year, but has since increased dramatically.
The increased cost of about £100m per year reportedly equates to about 8% of the aggregate audit fees paid by the FTSE 350 last year.
Under the proposal, FTSE 350 companies audited by one of the Big Four — Deloitte, EY, KPMG and PwC — would be required to hire a smaller firm to carry out up to 30% of the work.
The policy is aimed at increasing the number of players at the top end of the audit market and minimising disruption if one of the Big Four were to collapse.
Deloitte, EY, PwC and KPMG have all spoken out against the proposal.
A senior Big Four partner told the Financial Times: “The challenge will be: how do you justify this amount of cost if you’re not going to get a radically different-looking auditor landscape?”
The government has said it would not comment on any projected costs until it issued it’s revised impact assessment, arriving in “due course”.
