The European Commission should strive to reduce all potential
barriers to the entry, growth and survival of audit firms in the
international audit market in order to help reduce concentration,
according to 90 percent of respondents to an EC consultation.

The consultation sought comments on control structures in audit
firms and their consequences on the audit market; 67 responses were
received. In general, respondents agreed there is a need to open up
the international audit market and decrease the market share held
by the Big Four or at least ensure the current market structure
does not deteriorate further.

Most respondents said changing the rules to allow external
investment in audit firms would not help reduce concentration. They
argued a lack of access to external financial capital is not the
most significant barrier preventing the emergence of new

However, some of the respondents said allowing external investment
in audit firms might help smaller firms to grow.

Almost half the respondents said human capital is more important
than financial capital for audit firms to expand

Most auditors who responded to the consultation were opposed to the
external investor model but some suggested rules could be amended
to include other professionals who work full time in audit firms
and are subject to the same ethical rules, such as tax

Some respondents suggested the current loose associations of audit
firms into networks limits the efficiency of the services performed
and that the creation of more integrated firms and network should
therefore be encouraged.

Respondents also suggested measures to address the lack of
recognition by audit clients of the actual audit capabilities
existing on the market, especially the services that mid-tier audit
firms can provide.