Big Four attack 'unfair' fine plan
Are heavy fines the right way to combat audit failure?
The Times reports today that the Big 4 have reacted angrily to plans by auditing regulators to drastically increase the fines that will be charged for misconduct, describing the fines as "irrational" and "drastically misconceived".
It is not my place to comment on a spat between the Big 4 and their regulators. However, I do know that many have questioned in the past whether some of the fines levied against multi-billion dollar firms are little more than a slap on the wrist and therefore, essentially ineffective.
One key point, though, does emerge from this debate. There is widespread support from most quarters that there needs to be more competition within the audit market, particularly at the higher levels. And if these allegedly excessive fines do anything to deter market entrants, that would be counterproductive.
This particular nut certainly needs cracking, but perhaps a refined pair of Victorian nutcrackers might be more suitable than a massive sledge hammer in these circumstances.
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