LONDON: European Union rules agreed this week to increase competition in accounting are already being felt two years before they take effect, accountants Grant Thornton International said.
The EU’s new law from 2016 will force 35,000 companies across the 28-country bloc to switch accountants about every ten years to avoid overly cozy-relationships.
It aims to end the dominance of the “Big Four” accountants, KPMG, PwC, EY and Deloitte, and make it easier for Grant Thornton (GT), BDO, Mazars and other mid-tier firms to pick up more blue-chip clients.
The new law will bar accountants from auditing and giving tax advice to the same customers.
“The European reform is starting to have an impact as companies are thinking about different providers, such as by separating tax advice from auditing,” Grant Thornton International Chief Executive Ed Nusbaum told Reuters.
“Market forces see these changes coming and respond in advance.”
High profile changes in auditors so far in Britain and the Netherlands have been between the Big Four.
GT’s board has just agreed to invest tens of millions of dollars in new systems to handle different sizes and types of clients, particularly in Europe due to the changes coming.
On Friday it reported an 8.1 percent rise in global annual revenues to a record $4.5 billion to September, which Nusbaum said was the fastest increase among the top six firms.
Growth was fuelled by more customers in Britain, Brazil, China and India, with 2014 looking good as economies recover, Nusbaum added.
GT, which employs 38,543 staff in 134 countries, and BDO are the biggest of the mid-tier firms and have been snapping up local accountants across the world.
Last month BDO predicted rapid consolidation to leave two or three mid-tier players within a few years, but Nusbaum declined to make any predictions saying there was always room for niche firms.
December is the deadline set by the world’s 20 leading economies (G20) for U.S. and global standard setters to align their rules to make comparing companies easier.
The deadline has been repeatedly pushed back as differences over new rules hamper agreements.
“Full and complete convergence is dead,” said Nusbaum, a board member at the U.S. standard setter FASB’s oversight body.