Functional deficits in the German audit market
Functional deficits in the German audit market
These deficits represent a major obstacle to effective competition and has a negative effect on audit quality, threatens to undermine the public interest and stability of the financial markets, and poses risks to investments and growth.
The problems of high market concentration and barriers to market entry will not go away by themselves. The reforms implemented after the Wirecard scandal – the rotation obligation, the separation of auditing and non-auditing services and the liability caps – were understandable as individual measures, but taken together they have, in general, only deepened concerns about competition. They will have a sustainable and positive effect only when a suitable market design is implemented to strengthen competition diversity.