Accounting + Finance - auditing Essay Example | Topics and Well Written Essays - 1500 words

Accounting + Finance - auditing - Essay Example Audit concentration with big 4 is a globalised issue. An â€Å"analysis of auditor concentration among G8 economies revealed a high of 99% in Italy, followed by UK (98%), the US (97%), Canada 96%, and Russia (90%). Japan revealed a lower auditor concentration of 84%- while the reasons are unknown, increased activity is occurring in the Japanese audit market owing to PwC winding down their affiliates earlier this year. Relatively lower concentration in Germany (83%) cannot be attributed to any particular cause, whereas G8’s lowest concentration levels in France (61%) are largely due to the implementation of French joint- auditing regulations which were imposed in 1966. Across G8 the Big 4 firms accounted for an average of 91% of the market.† (Grant Thornton LLP, 2008)1. The 98% concentrated UK large audit market can further be divided into two segments; first segment is of FTSE 100 and FTSE 250 companies, and the other segment is of smaller listed companies. The concentration of large audits is evidenced by the fact that segment of â€Å"FTSE 100 and FTSE 250 are supplied audit services almost exclusively by Big Four, which audit all but one FTSE 100 companies, and 242 FTSE 250 companies. The other segment of market- smaller listed companies- is supplied by both the Big Four and mid- tier firms. Even here, the Big Four individually have significantly higher market shares than mid- tier firms.† (Oxera, page iv)2 Quantum wise larger audit assignments are only a small portion of total audit market in UK, and 98% of this section of total pool of audit work is concentrated with Big 4 firm. The Big four (Ernst & Young, KPMG, PricewaterhouseCoopers, and Deloitte) have an advantage because â€Å"the reputation and depth of resources of big firms put them in a strong position to mitigate the agency and costly contracting costs that are increasingly