Enforced Competition In The Accounting Profession-Does It Make Sense?

Historically, competitive markets for the nation's industries have been advocated by US political economists. To encourage competition, government agencies have been increasingly active in breaking up monopolies and preventing certain business combinations. Recently, increased competition has been forced on professions as well. This has resulted in the use of heretofore prohibited advertising and a downward pressure on fees. The last 10 years have been the most competitive ever in the accounting profession. However, in the accounting profession, severe price reductions can harm both the individual firm and the entire industry. In the area of audit services, 2 serious consequences of price-cutting exist: 1. As total revenues decrease, firms try to recoup lost revenues by pursuing the clients of smaller firms. 2. Firms may begin reducing their emphasis on performing high-quality audits and begin to perform other, more profitable services. Professionalism and quality in the performance of audits, rather than low price, should be the main concern for the future.