“The principle of shared audits is very attractive to challengers as long as the share of the audit is meaningful and brings incremental experience to teams. If the challenger firm is just going to get what’s left at the bottom of the barrel, that’s not interesting and doesn’t help.”
— Fiona Baldwin, head of audit at Grant Thornton in the U.K., said about the U.K. government’s proposal for “managed shared audits,” in which a Big 4 firm would work alongside a so-called challenger firm (i.e., a non-Big 4 firm) during the audit of a FTSE 350 company.
Soooo, according to the Financial Times, GT and BDO are considering not pitching for work on shared audits of FTSE 100 companies; however, smaller challenger firms like Mazars and Crowe said they would work with the Big 4 on shared audits of the largest U.K. companies in sectors where they have the required expertise.
ICYMI, here’s what our friend Jim Peterson recently wrote about the shared audit plan in the government’s consultation paper on audit reform in the U.K.:
[T]he Consultation contemplates (¶¶ 8.1.15-.16) that a FTSE 350 client of the Big 4 would be obliged in its audit tender process to identify a “meaningful proportion” of its statutory audit—not less than 10% and desirably closer to 30%, by metrics including audit fees, group revenues, assets, and profits—to be performed by one of the so-called “challengers”—that is, a firm below the Big 4 in size, yet brave enough to deem itself qualified to propose.
Whisper who dares: in a triangular relationship among an issuing company, its lead auditor, and a “challenger,” such an arrangement could satisfy none of the three.
Because the Consultation would not allow for joint bidding (¶ 8.1.17), a Big 4 firm preparing to take the lead would start from an untenable position—not even knowing the identity of the smaller firm, much less its qualifications, reputation, or resources by either industry or geography. Despite which, that lead auditor would, under applicable professional standards and the liability regimes to which its global-level work and overall opinion would be exposed, bear full responsibility for the results of the group audit including the work performed and up-streamed by the “challenger.”
Passing for the moment whether such inhibitions would implicate a scope restriction on the lead auditor’s acceptance and planning (see International Standard on Auditing 300), a lead firm’s risk manager would have cardiac arrest at any lesser level of involvement than essentially 100% re-performance of the work of the “challenger.”
As for the company under audit, its management and audit committee could scarcely with comfort identify between 10% and 30% of its operations to be devolved for audit by a “challenger” whose capability and experience at the FTSE level would range from untested to non-existent.
This whole shared audits plan seems like a big ol’ swing and a miss from a government being pressured to do something, anything to stop the Big 4’s dominance in the U.K. audit market.
UK plan to shake up audit market faces major setback [Financial Times]
Related article:
Audit ‘Reform’ In the UK: The Government Finally Speaks, and Says Little
Yes my friends, the Purple Rose of Chicago’s focus on all things dynamic and 
After yesterday’s news that 
Kinda hard to say it’s a swing and a miss when joint audits have been around since 1996.
Not in the UK