New UK and US researches: broader auditor firm choices apart from Big Four

　 　
There are recent reports and surveys indicating that greater choice in the audit market in the UK and the USA is needed.

In the UK, a report published by the UK Financial Reporting Council's Market Participants' Group reviews that the largest public interest entities have in recent years been unlikely to select non-Big Four firms as auditors. The report recognises the need for more efficiency, enhanced competition and greater choice in audit market.

On the other hand, according to the survey conducted by Harris Interactive on behalf of Grant Thornton LLP in the US in May 2006, a majority (67%) of US investors expressed that changing from a Big Four audit firm to another global or national firm outside of the Big Four would not make a difference. While 13% of the investors also viewed the changing as a positive decision.

A companion academic study by Dr. Scott Whisenant, who is affiliated with the University of Houston and the Massachusetts Institute of Technology, shows that no negative stock price reaction when companies changed from Big Four firm to Grant Thornton. The study further demonstrated investors' acceptance of firms outside the Big Four and indicated that Grant Thornton's audit quality equal to that of Big Four.

All these studies echo the call for a wider choice of auditors apart from Big Four and also increase the level of choice and competition for public companies re-evaluating their relationships with external auditors.

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