Tiers in the Profession. The auditing profession is currently seen as having three layers or tiers:

• The Big Four (previously the Big Five before Enron!) international firms

• The second tier – smaller firms which have numerous branches and international connections

• The small firms

 The great majority of listed company audits are conducted by the Big Four with the remainder conducted by the second tier. The concentration of the market into very large firm has come about because of the growth of globalization in world markets everywhere. As a result audit firms have to have the resources and expertise to operate in every country and have to know how to audit highly regulated modern businesses. The larger firms found that amalgamations amongst the audit firms were the way forward and as a result the world audit market is now concentrated in very few firms.

 There are clearly benefits to this as these firms have expertise and global facilities and can invest in expensive systems and the necessary Information Technology to meet their international clients’ needs. The disadvantages are the lack of competition and choice particularly for large companies.

 Globalization of business is now established fact and local factories, shop and service organizations in many countries are likely to be foreign owned or controlled. The problem with global businesses is that they operate in widely different legal and ethical systems. Only the large audit firms can acquire the global expertise to handle such audits.

The Future of the Profession

Current trends are still towards more mergers both of firms in the countries where the profession is more highly developed, for example USA and many European countries with firms in overseas locations.

Another trend is the debate about audit firms offering other services and the trend may be for audit firms to divest themselves of such consultancy services. A possible scenario is for firms to offer only a relatively limited range of services such as auditing, accounting and taxation. (Some firms have already sold off their consultancy services).