GAO report on audit firm concentration – 'no adverse impact'

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16 Jan 2008

The principal conclusion in a United States Government Accountability Office (GAO) report on audits of public companies is stated in the report's title: Continued Concentration in Audit Market for Large Public Companies Does Not Call for Immediate Action.

The report, which is addressed to the US Congress with copies to various Federal agencies, examines:
  1. concentration in the market for public company audits,
  2. the potential for smaller accounting firms' growth to ease market concentration, and
  3. proposals that have been offered by others for easing concentration and the barriers facing smaller firms in expanding their market shares.
The GAO found that "although the market for small public company audits has become much less concentrated since 2002, the continuing concentration in the market for larger public companies limits these companies' auditor choices but does not appear to have significantly affected audit fees." The report concludes:

In light of limited evidence that the currently concentrated market for large public company audits has created significant adverse impact and the general lack of any proposals that were clearly seen as effective in addressing the risks of concentration or challenges facing smaller firms without serious drawbacks, we found no compelling need to take action. As a result, this report does not include any recommendations.
Click to download the GAO Report on Concentration in Audit Market for Large Public Companies (PDF 2,501k). Here is GAO's One-page Synopsis (PDF 92k).

 

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