Forvis Mazars GmbH & Co. KG
Forvis Mazars Group SC is an independent member of Forvis Mazars Global, a leading professional services network.
ID: 759106145405-60
Lobbying Activity
Meeting with Pascal Canfin (Member of the European Parliament, Shadow rapporteur)
3 Sept 2025 · Omnibus I
Meeting with Stéphanie Yon-Courtin (Member of the European Parliament, Shadow rapporteur)
9 Jan 2025 · Concurrence
Meeting with Pascal Durand (Member of the European Parliament, Rapporteur)
21 Mar 2022 · CSRD (APA only)
Response to Strengthening the quality of corporate reporting and its enforcement
4 Feb 2022
Auditors play a cornerstone role of public interest for the benefit of economy and society: they reduce information asymmetries and build stakeholders’ confidence, fueling the transition towards a prosperous and sustainable EU economy. Auditors are facing increasing demands on quality and scope (ESG), but at the same time their number is shrinking in the EU PIE market. If this market is not open to increasing competition and welcoming additional players, who will have the capacity to audit and insure PIEs financial and sustainable information at a reasonable cost in the future?
In the context of an increasing number of cross-border operations and further integration of the Capital Market Union (CMU), there is a need for a single market solution through improving the EU framework on corporate reporting, which should contribute to further harmonisation and enhancement of audit quality for all EU entities.
We refer to the Mazars’ Group answer for the EU dimension response to this Call for evidence. As we were not able to convey our arguments through the German professional bodies, this Mazars Germany contribution aims at highlighting specific audit market concerns in the largest economy of the EU.
The German PIE audit market is highly concentrated. According to the latest data (Auditing in Europe: PIEs market structure in Germany, France and the UK, FAZ Institut, 2022), the four dominant audit firms audited 698 (71%) of the 980 PIEs in Germany in 2020:
- The combined turnover (1,76 trillion €) of the 240 listed PIEs audited by the Big Four amounted to 97% of the total turnover (1,8 trillion €) of the 381 listed PIEs (all 37 DAX companies were audited by the 4 dominant firms).
- The 263 insurance companies audited by the Big Four posted premiums of 373 billion €, which represented 94% of the premiums (397 billion €) of all insurance companies.
- The banks audited by the Big Four generated 6,3 trillion €, namely 93% of the total assets (6,8 trillion €) posted by the 258 German financial institutions.
Since it introduces new entry barriers which prevent challenger firms from getting into the PIE audit market, the new German legislation (FISG) will not reverse the long-lasting tendency of concentration.
Excessive concentration cannot but undermine audit quality. The limited number of audit firms in the PIE audit market not only impacts companies’ choice, competition on quality grounds, and the resilience of the profession, it also reduces the efficiency of quality incentives and generates supervisory self-containment. When there are cases of shortcomings in an audit, supervisors’ ability to take sanctions is reduced so as not to risk threatening any firm’s license to operate and maintain sufficient audit capacity for major companies.
The situation is strikingly different in France, where joint audit is compulsory for most PIEs since 1966, with a large number of audit firms active in the PIE audit market (256 in 2020):
- If 58% of the combined turnover of listed PIEs is audited by a joint audit completed by two Big Four firms, 33% is audited by at least one non-Big Four audit firm.
- 49% of the combined premiums of insurance companies (509 billion €) are audited by at least one Next Ten audit firm.
- Non-Big Four audit firms audited financial institutions which generated 28% of the total assets (9,1 trillion €) of the 416 PIE financial institutions in 2020.
Joint audit can address both quality and choice challenges in the EU PIE audit market. The four-eyes principle guarantees an additional security check on corporate reporting: two pairs of eyes from different audit firms ensure the reliability of information and the independence of auditors better than any firm’s internal quality control management systems could. With appropriate transitional measures and time, it is possible to change the rules of the game, set up the conditions to structurally improve audit quality, and offer a larger choice of auditors to PIEs.
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