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MODELLING OF AUDITING BUSINESS OLIGOPOLY FACTORS
Jolanta Dalia Staliūnienė1, Rūta Bliekienė2
1
Kaunas University of Technology, Lithuania, [email protected]
2
Kaunas University of Technology, Lithuania, [email protected]
Abstract
The article analyses relevant manifestations of the audit market oligopoly. Previous as well as
statistical research allows making conclusion that a lot of markets in Lithuania have very little equal
participants and can be described as the areas and markets of oligopolic activities. These include
telecommunication service, pharmaceutical trade, fuel, public purchase, and public administration.
Mathematically oligopoly is most often defined using so called the ration of four enterprise concentration. If
four biggest enterprises control more than 40 percent of production in the economy sector it is considered that
the oligopoly exists in the sector.
The paper analyses the following questions to acknowledge hypotheses: Ho – the current structure of
audit market could pose a systematic business risk and alternative H1: (1) Can the current structure of the
audit market pose a systematic business risk? (2) How to increase the dynamism of the audit market and to
provide conditions for the small and medium enterprises to be more actively involved in the audit market
segment of big enterprises? (3) How should the fair competition related oligopoly problem be solved? (4)
What circumstances would allow the radical change of tendencies?
The qualitative and quantitative analysis of oligopolic factors in the audit market has been performed.
On the basis of the analysis the business risk model has been made. After applying business risk model to the
management of oligopoly, „systematic audit enterprises“ would be limited in the entire audit market, and
small and medium enterprises could act in the conditions of fair competition. Results: formulated significant
exogenic and endogenic systematic business risks of oligopoly
Key words: oligopoly, competition, systematic audit business risks, unsystematic audit enterprise
JEL Classification: M42, D43, C58.
Introduction
Problem substantiation. A lot of markets in Lithuania have a small number of almost equal
participants and therefore can be described as oligopolic markets and areas of activity; they include
telecommunication services, medicine trade, fuel, public purchasing and public administration.
Mathematically oligopoly is usually described using so called concentration proportion of companies. If the
economy sector contains four major companies that control more than 40% of production, there is a threat
that all oligopolists will make an agreement among them and will quote larger than market prices, thus
forming the cartel. Compared to the previous periods in the year 2009 the concentration of Lithuanian audit
market has increased: 20 % of audit enterprises (by the end of 2009 the number of audit enterprises was 193
(20 % is 39 enterprises) published 68,2 % (during the previous period 66,7 %) of the total annual auditor
conclusions and received 87,0 % of the total income from the audit activities (during the previous period 83,
%.). Following statistics, the four biggest companies in the audit sector (JSC „Deloitte Lietuva“, JSC „Ernst
& Young Baltic“, JSC „KPMG Baltic“, and JSC „PricewaterhouseCoopers“) have a control over 22,7 % of
market. Therefore, it is advisable to analyze the case of the audit market oligopoly. Upon the initiative of
European Commission “The Green Book”, which emphasizes competition and concentration issues of the
audit market, was published on 13 10 2010. While assessing the income or prices in the majority of EU
member states the foursome of the general market segment of the Great audit enterprises while performing
the audit of the enterprises included in the trading list is more then 90%.
Hypotheses: Ho – the current structure of audit market could pose a systematic business risk and
alternative H1.
Research object: competitive policy of audit business
The aim of the research: to design the model of competitive factors in audit business
Objectives:
1. To distinguish the key competitive factors of audit business;
2. To perform the research of the reliance of exogenic or endogenic factors;
3. To formulated significant exogenic and endogenic systematic business risks of oligopoly
The methods applied: expert research – for the identification of the importance of factors, correlation
model by using significance level α=0,05 – for the confirmation of factor importance, Spearman criterion –
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for the confirmation of the reliance of exogenic or endogenic factors, for the affirmation of hypotheses Kolmogorov-Smirnov criterion.
Theoretical background
Industrial organisation theory. It is unfortunate that few studies point out the significance of recent
developments in industrial organisation theory to studies of audit market concentration and competition.
Traditional industrial economics holds that market structure (i.e. the numbers of competing firms and their
market shares) is a causal determinant of market conduct (i.e. the extent and nature of price and non-price
competition). Market conduct, in turn, determines economic performance, in particular, whether or not
excess profits are earned through oligopolistic collusion or the exercise of monopoly power. It is belief in
this structure-conduct-performance paradigm, in Bain’s (1956) traditional formulation, which explains the
concerns about rising levels of audit market concentration. Figure 1, panel A shows these simple linkages. A
great deal of merger analysis is still based on the analysis of market structure and concentration ratios,
perhaps because they are relatively easy to measure. In recent years, however, industrial economists have
moved away from claiming that a strict causal relationship exists between concentration and competition. It
is argued instead that, in equilibrium, both concentration and performance are jointly determined by
underlying cost and demand parameters (Figure 1, panel B). Under this view, the detrimental effects of rising
concentration are less clear-cut.
Panel A: Naïve view
Structure
Conduct
(competitive
behaviour)
Performance
Panel B: Sophisticated view
Cost and demand
parameters
Structure
Conduct
(competitive
behaviour)
Performance
Figure 1. The structure-Conduct-Performance Paradigm of Industrial Economies (Bain’s, 1956)
As we can see in Figure 1, according to the theory of industrial organization and the experience of
developed countries, in the early stages of market development, market structure often plays a fundamental
and decisive role. Therefore, in the audit market of Lithuania, these factors are interconnected and
interacting, the market structure plays a fundamental and decisive role.
Traditional theory of industrial organization thinks that the market structure in between plays a
decisive role, and new theory of industrial organization thinks that the market conduct and market
performance play a major and decisive role, the two representative viewpoints eventually have been
developed for famous structure hypothesis and efficiency hypothesis of industrial organization theory. These
two hypotheses lead to a lot of empirical research literatures: Ho – the current structure of audit market could
pose a systematic business risk and alternative H1. Lithuania's capital market and audit market are not long,
and the related system is still imperfect, and the market mechanism has also failed to play its due role, and
the role of "visible hand" is also not obvious. The true essence, audit market of Lithuania has birth defects,
that is, in the initial stage of the socialist market economy, audit market of Lithuania has characteristics of
excessive competition, such as low audit concentration and high competition intensity and low market
performance.
Excessive competition theory is a new field of the modern theory of industrial organization. In recent
years, economic circles of Lithuania and researchers of industrial organization theory particularly have
concerned about excessive competition issues, and produced a more abundant research results.
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Modern theory of industrial organization analyzes the characteristics of excessive competition from
the market structure, market conduct and market performance, therefore we also analyze excessive
competition of audit market of Lithuania from these three perspectives: loose oligopoly (four firms have less
than 40%), monopolistic competition (many competitors each with a slight degree of market power) and pure
competition (many competitors, none of whom has market power). Moreover, the ‘new industrial
organisation’ economics has brought strategic issues to the fore, emphasising the importance of barriers to
entry and strategic interactions. According to the theory of industrial organization, market structure, market
conduct and market performance are interrelated and interactive. After summarising the statistical data of
Lithuanian audit market the need to analyse the case of oligopoly in Lithuanian audit market. The modern
industrial organisation literature classifies markets into six broad types. Three market types are characterised
by high market power and generally ineffective competition: monopoly (one firm has 100%); dominant firm
(one firm has 40% to 99%); and tight oligopoly (four firms have over 60%). The other three market types
exhibit effective competition: loose oligopoly (four firms have less than 40%), monopolistic competition
(many competitors each with a slight degree of market power) and pure competition (many competitors,
none of whom has market power). Modern theory of industrial organization studies the phenomenon of
excessive competition mainly from the market structure, market conduct and market performance, which
provides us with a theoretical foundation and research methods to study excessive competition of the audit
market from more multi-dimensional perspectives.
Conditions of Lithuanian oligopolic audit market formation
Audit firms are normally divided into two groups based on brand name or firm size: the Big 4 versus
the non-Big 4, with the Big 4 firms dominating the audit services market. (3) For example, 73 percent of the
7,006 publicly traded companies included in Who Audits America (2003) were audited by the Big 4, and the
rest were audited by 81 non-Big 4 firms. With just a few firms dominating the market, it is reasonable to
expect these firms to act as strategic competitors. In this study, we examine how audit firms can use their
profit-sharing rules as strategic instruments to compete in an oligopolistic audit market.
By the end of the year 2009 in Lithuania the name of n auditor, which, gives the right to perform the
audit of financial reports (hereinafter – audit), was possessed by 413 certified auditors (hereinafter –
auditors) – the members of Lithuanian palace of auditors; 416 people were the candidates for the auditor
title, these were the individuals included into the list of auditor assistants; and 193 enterprises were included
into the list of audit enterprises (hereinafter – audit enterprises) that are registered in Lithuania (the requests
concerning the inclusion into the Lithuanian list of audit companies by the enterprises registered in other
countries were not received). Following the audit law of the Republic of Lithuania the auditor can perform
the audit only of one is: the owner of the personal enterprise (10 % of all auditors), the real member of real
partnership or commandite (1 %) or works in the audit enterprise (56 %).
Comparing with previous years in 2009 the income of audit enterprises from European structural fund
projects and other reviews has decreased in half. However, the income from accounting services remained
stable, while in spite of the decrease in general number of performed audit, the audit income increased by 4
%. The income from audit activity again became the main source of income of audit enterprises. The income
from audit activity makes up 38,6 % of the total audits enterprise income. In 2009 35 % of audit enterprises
received more than half of their income from audit activity. An important part in the structure of the income
of audit enterprises is made by consultancy services – 33,0 % and the income from accounting services –
19,7 %. While other income makes only 8,7 % of the total income of audit enterprises.
Following the audit law of the Republic of Lithuania no less than 3/4 of the property of an audit
enterprise should belong to the auditors of Lithuania or other European Union member state as well as audit
enterprises of Lithuania or other European Union member state. During 2009 the most income was received
by audit enterprises that belong to Lithuanian auditors, however the individuals of other countries possess
37,5% of the income from audit enterprises and assessing only the income from audit activities – even
47,7%. Although audit networks possess only 19 audit enterprises, however they occupy 3/4 of the total audit
market. The number performed by the four biggest audit enterprises and the audits performed by other
enterprises differ more than three times. This ratio was similar during the last year; however more income
from audit activities is received by the four biggest audit enterprises.
(1) Can the current structure of the audit market pose a systematic business risk? Comparing with
previous periods in the year 2009 the concentration of audit market was increasing: 20 % of audit enterprises
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published 68,2% (in the previous period it was 66,7 %) of the total annual auditor reports and received
87,0%( in the previous period it was 83,9 %) of the total income from audit activity (Figure 2.).
120
100
94,4
87
98,2
95,3
85,7
80
99,8
99,5
Signed reports
68,2
60
Income from audit activity
40
20
20
10
0
1
41
81
121
141
Figure 2. Audit market concentration in 2009 in Lithuania
As shown by statistics the four biggest enterprises (JSC „Deloite Lietuva“, JSC „Ernst & Young
Baltic“, JSC „KPMG Baltics“, and JSC „PricewaterhouseCoopers“) in Lithuanian audit sector control 22,7
percent of market.
The research of exogenic and endogenic factor interdependence
In order to identify what competitive factors influence the formation of oligopolic audit market, the
reference to the notional audit business competition factor groups identified by Gimžauskienė and
Staliūnienė (2010) was made: the characteristics of an audit service, necessary resources and competences,
the need and the interrelations of which is formed by the level of audit service assurance. Shapiro, Carl.
(1989), Fudenberg, Drew, and Tirole, Jean. (1986), Friedman, James W. (1983), who researched the
concentration of systematic business risk, identified that the bankruptcy of the „systematic audit enterprises“
or the enterprises the activity extent of which has reached „systematic value“ can disorganize the activity of
the whole market. There are ongoing worldwide discussions about how to apply the issues of business ethics
and business risk to assure the fair competition (Fritzsche 1986; other approaches to business risk ethics;
Hansson 2003; Lewens 2007). Deltuvaite, V., Vaskelaitis, V., & Pranckeviciute, A. (2007) analyzed the
impact of concentration on competition and efficiency in the Lithuanian banking sector, where there is a lack
of business ethics and business risk to assure the fair competition.
(4) What circumstances would allow the radical change of tendencies? Other authors such as
Stanikunas, R. (2010), Sapkauskiene, A., & Leitoniene, S. (2010), Miron, D., & Paul, A. (2010) supply the
external factors with criminal situation, legal acts, taxes, geographic, economic factors, customer, partner,
competitor expectations, scientific progress, market supply, culture, ecology, etc. They are identified as the
source of problems both for organisation and its managers. Managers should reveal external environmental
factors that will influence the activity of an organisation and should respond to them appropriately.
Chen, C. K. (2008) research results show that the knowledge-based economy indicators can be divided
into five categories in order: information infrastructure, business environment, human resources, innovation
system, and performance indicators. All the factors describe the inner environment of organisation (staff
competences, property, technique and technology, information, financial resources, organization structure,
culture, product).
The results of organisational activity are determined by aims, rational and feasible tasks, functional
staff, optimal structure of organisation and applied technology. Beattie, V. and Goodacre, A. and Fearnley, S.
(2003) describe, that In particular, the modern theory of industrial organisation makes no clear statement
regarding the impact of concentration on competition – the focus of this paper is concentration and no
inferences are made about competitive aspects of the market. For this purpose the authors of the article
identified two groups of factors of oligopoly in the audit business: external (exogenic) and internal
(endogenic), the list of which is presented in Table 2:
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Table 2. Exogenic and endogenic factors of oligopoly
re
x2
x3
x4
x5
x6
Exogenic factors of oligopoly
Independence
Confidentiality
Professional competence (skills required for work
with audit software, professional competence of
employees)
Strength of the user and provider interaction
(contacts)
High work intensity (communication, behaviour,
speech, actions)
y1
y2
Endogenic factors of oligopoly
Time
Experienced employees
y3
Audit technology (know-how)
y4
Communication
y5
Material facilities
Performance of special (complex) audit
engagements
x7
Reliability
Extent of tailoring of the service for individual
needs of the user (wording of wishes, mood for
involvement, knowledge about the duration of the
process)
c2
x8
Service accessibility (location, sufficient number of
employees, attention to the customer’s businesses)
c3
x9
Customer’s involvement
c4
x10
x11
x12
z1
z2
z3
z4
z5
z6
Recommendations do not get obsolete (are given
directly to the managing personnel)
Innovative knowledge is shared together with the
methods of adaptation, therefore they are faster put
into practice
The feedback enables correction of knowledge,
putting thereof into practice (experience).
Competitive advantage due to more effective work
methods employed
Application of customer loyalty instruments
Personnel management
Pricing solutions
Application of strategy for non-acceptance of
business risky customers
Application of reputation/brand management
instruments
c1
c5
c6
c7
Proper monitoring of audit quality
Development of the audit report that is supported by
sufficient and appropriate audit evidence in
compliance with the applicable independence
requirements
Acceptance and continuance of relationship with the
customer
Assignment of engagement teams, ensuring the
collective capabilities and competence to perform
the engagement and issue an audit report
Direction, supervision and performance of the audit
engagement in accordance with professional
standards and regulatory and legal requirements
Consultation, review and discussions about work
performed
(3) How should the fair competition related oligopoly problem be solved? Only the organisation that is
able to adapt to the external environment can survive and function successfully (Bernatonyte, D.& Z.
Simanaviciene, et al., 2007). Burinskiene, M. & V. Rudzkiene (2007) confirmed, that for the identification of
target market, to which the business strategy will be directed, one should know the features, needs and
opinions of the users in order to define the coherent homogenous groups. In an oligopoly, each company
knows that its profits depend on actions of other firms. This gives rise to the "Prisoners’ dilemma". Game
theory is the study of how people behave in strategic situations (i.e. when they must consider the effect of
other people’s responses to their own actions).
The following hypotheses were raised: Ho – current structure of audit market could present systematic
business risk and alternative H1. 55 questionnaires were sent to audit enterprises, 21 of which are suitable for
processing. In the questionnaires the respondents marked the strength of the interrelation between the service
characteristics and resources as well as the strength of competences in the 5 point scale, where 1 means that
the influence is possible and 5 – the influence is strong.
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2 18 3 3 95 3 46 3 8 0 35 1 34 1 3 70
39 5 72 66 6 6 6 9 5 7 65
50 4 91 77 8 9 7 2 8 5 90
44 4 92 67 7 1 7 4 6 7 73
44 1 66 85 8 2 6 1 7 3 74
39 9 74 51 7 2 7 5 5 9 68
z1 z2 z3 z4 z5 z6
43 1 90 48 8 9 6 8 6 7 69
42 9 80 56 7 8 6 5 7 8 72
35 3 61 48 6 9 4 9 5 8 68
46 1 69 91 6 4 8 1 7 7 79
37 6 67 50 8 6 5 7 5 4 62
41 7 76 54 9 1 5 5 6 2 79
45 4 84 71 8 5 7 6 5 0 88
2 92 1 5 27 4 18 5 6 2 45 1 44 6 5 17
y1
y2
y3
y4
y5
c1
c2
c3
c4
c5
c6
c7
2 73 2 9 3 3 7 4 31 6 4 10 3 6 6 3 4 5 34 2 3 20 3 8 0 4 0 1 37 0 4 1 90
44 3 4 7 7 7 0 89 6 9 6 2 6 1 61 7 7 7 8 7 2
7 94
71 8 5 9 6 7 5 95 1 0 0 7 6 6 8 66 9 1 9 0 8 1
9 94
62 6 7 8 4 5 6 93 8 0 7 3 7 3 67 8 2 9 2 7 4
9 03
60 7 0 6 3 7 8 65 6 3 7 8 7 2 87 5 6 6 4 8 6
8 42
36 3 7 5 4 3 7 68 5 4 5 6 6 8 39 7 4 7 7 5 7
6 57
x1 x 2 x 3 x4 x5 x 6 x 7 x8 x9 x 10 x 1 1 x1 2
72 7 2 7 2 7 2 73 7 3 7 2 7 2 72 7 3 7 3 7 2
8 70
72 7 2 7 2 7 2 72 7 2 7 2 7 2 72 7 2 7 2 7 2
8 61
59 5 9 5 9 5 9 59 5 9 5 9 5 9 59 5 9 5 9 5 9
7 10
77 7 7 7 6 7 7 76 7 6 7 7 7 6 77 7 6 7 6 7 7
9 18
63 6 3 6 3 6 3 63 6 3 6 3 6 3 63 6 3 6 3 6 3
7 57
70 7 0 7 0 7 0 70 7 0 7 0 7 0 70 7 0 7 0 7 0
8 41
76 7 6 7 6 7 6 76 7 6 7 6 7 6 76 7 6 7 6 7 6
9 14
4 89 4 8 9 4 8 9 48 9 4 89 4 8 9 4 8 9 48 9 4 89 4 8 9 4 8 9 48 9 5 8 70
Figure 3. Survey results
Various mathematical models are applied to define these groups. Application of quality analysis
methods is a valuable measure enabling specialists and planners to apply the proposed solutions by taking
account of their specific features and peculiarities.The following methods were used to process the research
data: expert research – for the identification of factor importance – correlation method, Spirmen criteria (SP)
– for the confirmation of the interdependence of exogenic and endogenic factors, confirmation of hypotheses
- Kolmogorov-Smirnov criteria (hereinafter - K-S). The notional (significant)factors and the directions of
their interactions were received by using the level of significance α=0,05 (Table 3.):
Table 3. Interdependence of exogenic and endogenic factors of oligopoly
Y1 ↑
Z1
↑
Y2 ↑
↑
Y3 ↑
↑
Z2
Z3
Z4
↑
Z5
C2 ↑
C3 ↑
C4 ↑
C5 ↑
X1
↓
↑
X2
↓
X3
X4
↑
↑
R9=84
↑
Y4 ↑
Y5 ↑
C1 ↑
Z6
↑
R10=78
↓
X5
↑
R11=89
↑
R12=95
↑
X6
X9
↑
X12
↑
↑
↑
↓R13=39
↑
R1=90
↓
↓
R3=48
↑
R4=91
↑
R5=50
↑
R7=49
↑
R8=81
↑
C6 ↑
C7 ↑
↑
↑
R2=84
R6=85
↑the same relation direction
↓opposite relation direction
R – significant systematic oligopoly business risks (number and their score)
As we can see in Table 3, on the basis of the responses of researched enterprises the action directions of
oligopolic competition factors were identified following the sign of the number value of correlation coefficient.
When the sign is negative – factors influence each other in opposite directions, when it is positive – with the
increase of influenced factor, the influencing factor also increases. Ho – current structure of audit market factors
could present systematic business risk is not thru and author’s agree with alternative H1.
If the factors of this group come closer to the ones that duplicate each other and the correlation of all
other factors match the significance level α=0,01, therefore, they will not be used for the composition of
competitive policy business risks model.
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(2) How to increase the dynamism of the audit market and to provide conditions for the small and
medium enterprises (SME) to be more actively involved in the audit market segment of big enterprises?
Bernatonyte, D. & Simanaviciene, Z. et al. (2007) accept, that Lithuania is a small open market, thus its
economy largely depends on foreign trade. SME play the main role in Lithuanian foreign trade.
The opinion of the article authors is that it is necessary to manage oligopoly business risks following
this sequence according to their score. Using SP significance level α=0,05 we can see influence of significant
exogenic (x3y3, x4y4, x5y1, x5y2, x9y5) and endogenic (c1z1, c7z1, c3z2, c4z2, c5z2, c7z3, c3z4, c4z40)
factors group of oligopoly, as business risks:
Table 4.. Significant exogenic and endogenic systematic business risks of oligopoly
Significant exogenic systematic business
risks of oligopoly (X factors group)
Factors Score
Business risks
group
x3y3
84
R9 - Knowledge, abilities
and demonstration
(training of others) allow
to improve audit
technology
x4-y4
78
R10 - Audit service is the
service of high intensity
and adjustment, provided
through communication
x5-y1
89
R11 - The experience is
received by longer work
x5-y2
95
R12 - Specialized
experienced employees
retain high quality and
intensity
x9-y5
39
R13 - The more client is
involved the less
resources are necessary
for an audit company
Significant endogenic systematic business risks of oligopoly (C
factors group)
Factors Score
Business risks
group
c1-z1
90
R1 - Special competence allows to accept those
clients who are too complicated for other audit
enterprises
c7-z1
84
R2 - The more consultations inside audit groups
the more effective is the work
c3-z2
48
c4-z2
91
c5-z2
50
c7-z3
85
c3-z4
49
c4-z4
81
R3 - The longer the auditor and the client
communicate, the weaker is independence
R4 - Very dangerous long term relation
regulated by the LR audit law as the liability of
independence for assurance tasks (it is
necessary to change the auditor)
R5 - Using collective abilities meets client
expectations better, perceiving it as an
additional service value and a guarantee of
loyalty
R6 - The whole of collective abilities and
competences increases by the appropriate
recruitment of staff
R7 - Assurance of independence by recruiting
new auditor always causes the effect of price
raise for audited organisation because the work
of the previous auditor needs to be reviewed
R8 - Usually the price of the first audit is higher
than the one of the following audits
As one can see from the table, the scores given by experts range from 39 to 95, that will be used for
the formation of the business risk competitive policy model formation. Significant exogenic and endogenic
factors (business risks) of oligopoly of audit enterprises was designed to verify H1. Preconditions business
risks management measures adaptation: seeking for fair competition every audit company should understand
the fact of oligopoly and its impact as well as to perceive identified business risks and to be able to prepare
suitable responses for them according to score.
Conclusions
By summarising the results the authors answer the questions raised in the article:
(1) Authors think that Lithuanian audit market is very close to the structure of oligopolic market.
Following statistics, the four biggest companies in the audit sector (JSC „Deloite Lietuva“, JSC „Ernst &
Young Baltic“, JSC „KPMG Baltics“, and JSC „PricewaterhouseCoopers“) have a control over 22, 7 % of
market. If the economy sector contains four major companies that control more than 40 % of production,
there is a threat that all oligopolists will make an agreement among them and will quote larger than market
prices, thus forming the cartel.
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(2) The opinion of the article authors is that it is necessary to manage oligopoly business risks
following this sequence according to their importance (expert opinion) (See Table 4.): R12-95, R4-91, R190, R11-89, R6-85, R2-84, R9 -84, R8-81, R10-78, R5-50, R7-49, R3-48, R13-39 scores. If score is high
(100 / 3), score from 67 to 100, audit company should prepare and apply for emergency measures, for
average business risks - (score 33-66) – apply management plan in the near future.
(3) In an oligopoly, each company knows that its profits depend on actions of other firms. This gives
rise to the "Prisoners’ dilemma". According to article author’s opinion Game Theory could be applied to
solve Prisoner's Dilemma. Game theory is the study of how people behave in strategic situations (i.e. when
they must consider the effect of other people’s responses to their own actions). Significant exogenic (R9R13) and endogenic (R1-R8) factors of oligopoly of audit enterprises was identified as business risks.
(4) Therefore in these circumstances it is impossible for small and medium companies to apply the
issues of business ethics and to business risk assuring the fair competition with „systematic audit
enterprises“. The conditions to change the tendencies substantially are provided by the initiative of European
Commission “The Green Book”.
References
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