Michel Barnier’s green paper on audit reform would increase risks for auditors, but remains silent on the issue of liability, argues Matthew Lawson
The green paper on audit policy published 13 October by Europe's internal market commissioner, Michel Barnier, is full of contradictions. While recognising that auditors were not responsible for the banking crisis, it nevertheless puts forward proposals for consultation which, if adopted, might lead to the break up of the Big Four, a regulatory fate not so far visited on the naughtiest of Europe's problem banks.
While the aim of increasing competition in the audit market is a laudable one, the immediate problem is that only the largest firms tend to have the resource required to audit the largest companies. It will not be straightforward in the short term to open up the audit of those companies to more players while at the same time maintaining quality and controlling risk and cost.
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