UK to review accounting changes after EU deal

The Deloitte Company logo is seen on a commercial tower at Gurgaon, on the outskirts of New Delhi August 9, 2012. REUTERS/Parivartan Sharma

By Huw Jones

LONDON (Reuters) - Britain's competition watchdog will review changes it has ordered to prise open an accounting sector dominated by four big players after the European Union agreed a tougher set of reforms.

Britain's Competition Commission decided in October the country's top 350 companies must put their book-keeping out to tender at least once a decade, to shake up a market dominated by KPMG, PwC, EY and Deloitte.

Since then, the EU agreed in December to go a step further and force listed companies across the 28-country bloc from 2016 to actually change their accountant every 10 years.

The UK watchdog had initially backed mandatory switching but its final report was watered down.

Both sets of reforms are part of a regulatory clampdown following the 2007-09 financial crisis, because auditors had given banks a clean bill of health just before many had to be rescued by taxpayers.

"We are keen to follow the principles of better regulation, including by ensuring that our orders do not contradict or duplicate EU regulation," Britain's Competition Commission said in a statement on Friday.

"We anticipate further rounds of consultation on our revised orders in the third quarter of 2014 and a commencement date in quarter four."

A key clash between the UK and EU reforms is on the very different timetables for phasing in the changes.

"We hope that the Competition Commission takes this opportunity to consider the interplay between their own transition proposals and those of the EU legislators," said Gilly Lord, UK head of regulatory affairs at PwC.

"Complexity for businesses would be reduced if these two regimes were aligned," Lord said.

David Barnes, head of public policy at Deloitte, said the audit market faced a "potential quantum" of changes and welcomed efforts to align their introduction.

Other differences between the two sets of rules include a planned UK ban on a bank insisting that one of the Big Four accountants must be hired as book-keeper if a company wants a loan. The EU law will introduce a broader curb and prohibit any restriction on choice of auditor.

Next week the EU will begin formal votes to rubber-stamp December's agreement.

(Editing by Mark Potter)