The Big Four are moving to a position of unchallenged market dominance. This is the view of the General Accounting Office (GAO), the US government’s research arm.
In a report to the US Senate’s banking committee, the GAO concludes that the smaller number of dominant firms raises issues of choice, price, quality and concentration risk.
‘The largest firms have the potential for significant market power following mergers among the largest firms and the dissolution of Andersen. Although the GAO found no evidence of impaired competition to date, the significant changes that have occurred in the profession may have implications for competition and public company choice, especially in certain industries.
‘GAO has found that fees have started to increase and most experts expect the trend to continue,’ said the report.
The GAO was particularly concerned that smaller firms face significant barriers to entry in the market. These include lack of staff, industry and technical expertise, capital formation, global reach and reputation.
‘As a result, market forces are not likely to result in the expansion of the current Big Four. Certain factors could cause a further reduction in the number of major accounting firms.’