17 March 2023 — Publication
Auditing public interest entities (PIEs), ranging from banks and large international companies to smaller and more locally listed companies, requires significant resources and skills and is highly regulated. Having a diverse and resilient statutory audit (hereafter ‘audit’) market with enough audit firms active in it is crucial and in the public interest. It ensures that all PIEs’ and their stakeholders’ needs are served, and PIEs can choose their auditor primarily based on quality.
The limited choice of audit firms and concentration in the PIE audit market are interlinked topics that have been attracting a lot of attention from stakeholders such as academics and policymakers. This publication’s aim is to contribute to the debate focusing on the aspect of auditor choice, through looking at all parties that play a role in this market – companies including their audit committees and shareholders, auditors, policymakers and audit supervisors. In particular, our aim is to:
In the context of the European Commission’s ongoing initiative on enhancing corporate reporting and considering the future of the audit market, we urge policymakers not to underestimate the disincentives and real challenges that audit firms face when attempting to move into or expand in the PIE audit market. We also invite policymakers to consider and explore our ideas to make PIE audits more attractive. Importantly, impact assessment of any measure under consideration will be necessary to inform future policy making.
We stand ready to continue contributing to this important debate and talking with stakeholders, as we have done through outreach when developing this publication.
We plan to organise an event in 2023, to enable the discussion amongst relevant stakeholders.