Second-Tier Auditing Firms: Developments and Prospects

R. Mithu Dey, PhD, CPA, and Ashok Robin, PhD

The Government Accountability Office (GAO) offers mixed signals in its studies of the auditing market. On one hand, it finds no evidence that concentration has affected audit quality or audit fees; on the other, the GAO, citing “data limitations,” acknowledges it is unable to conclude that the auditing market is competitive. (See a 2008 GAO report, “Audits of Public Companies: Continued Concentration in Audit Market for Large Public Companies Does Not Call for Immediate Action,” www.gao.gov/new.items/d08163.pdf. For a succinct summary, see Robert Bloom and David Schirm, “An Analysis of the GAO Study on Audit Market Concentration,” The CPA Journal, April 2008.)