Supplementary memorandum by Mr David Herbinet,
Mazars (ADT 48)
I thought it may be helpful if I followed up
on Questions 135 and 136 from Lord Forsyth of Drumlean concerning
the audit market in France.
An independent review carried out in the UK
on the audit market indicated that more than 70% of FTSE 100 companies
had not held a competitive tender for at least 15 years (in some
cases it may, of course, be for a considerably longer period).
By contrast over 50% of CAC 40 participants in France have put
their audit out to tender in the last five years.
In the FTSE 250 in the UK just 4.4% are audited
by a non-Big Four firm. This compares with France where in the
case of the largest 2010 listed companies outside the CAC 40 80%
are audited, in a joint audit capacity, by a non-Big Four firm.
Moreover, 101 audit firms are involved in these audits in France
which enables them to gain exposure to the listed company audit
market and, if they choose to invest, they can do so in order
to build a bigger market share.
The key lessons we would draw from the above
analysis are that joint audit has enabled firms to compete and
establish themselves in the audit market for large listed companies
and that fair and regular tendering is essential if non-Big 4
firms are to build their market share. Joint audit facilitates
regular tendering since if the mandates of the joint auditors
are reviewed at different times one firm can be changed whilst
the other remains in office.
If you would like to discuss the above, or any
other points, please do not hesitate to contact me.
17 November 2010