An Evaluation of the French Experience with Joint Auditing

Abstract

The Green Paper entitled “Audit policy: Lessons from the crisis” (European Commission, 2010) recommends the introduction of joint audit for European listed companies, based on the French experience, to limit the market dominance of the Big 4 and to promote audit quality. However, the regulation passed by the European Parliament in April 2014 does not require, but only encourages the use of two auditors for public-interest entities (European Parliament, 2014). Since many groups of interests tried to influence the European Commission during the consultation process, it is relevant to evaluate the costs and benefits for investors of the unique joint audit system that persists among the occidental economies. Overall, the results drawn from the academic literature involving the French audit setting suggest that the French market is slightly less concentrated than other European markets. However, joint audit does not increase the quality of accounting information, while the cost of auditing services is significantly higher in France. Together, these elements cast serious doubt on the efficiency of the French mandatory joint audit system for investors.

Keywords: Joint audit, France, Auditor concentration, Audit fees, Audit quality

JEL Classification: M40, G38, L16