Audit Commission mutual choked by cap on market share

AN AUDIT COMMISSION decision to limit the number of contracts that can be won by any single firm has huge implications for a fledgling mutual of staff members.

The soon-to-be-abolished public audit provider has split England into four regions in which firms can win a maximum of one lot, meaning each can corner no more than 40% of the market.

These contracts audits represent 70% of the public sector audit market, a huge chunk of potential business and a chance for firms to gain a foothold in the lucrative sector.

Commission audit chief Gareth Davies has been granted leave to take on the task of establishing an employee-owned outfit to bid for public sector audits, and last year registered a company under the name DA Partnership for this purpose.

Davies said the decision to prevent firms cornering the market is “unsurprising”, conceding: “We knew it would be hard.”

However, he had some hopeful thoughts on the bidding war, saying: “For any new company, entering the market with a 70% share would be brave – not all new companies would want such a significant share.”

For commission employees, the decision means that around half will not be able to join the mutual due to a lack of work. A spokesman said the employee-owned enterprise is still very much a topic of discussion at the body and staff “are very interested”.

Gareth Davies would not be drawn on the practicalities of setting up the mutual, saying information on funding and administrative matters will be released “after the details are sorted out”.