The number of companies in Ireland being audited by one of the so-called "Big Four" accountancy firms is "dangerously high" - and is ahead of other developed economies, new research shows.

According to a recent report by consultancy Grant Thornton, an overwhelming 96 per cent of Irish companies have one of the Big Four firms as their auditor. This compares with 91 per cent of companies in the G8 economies.

The Big Four firms are: PricewaterhouseCoopers; KPMG; Ernst & Young; and Deloitte.

While over-reliance on a handful of accountancy firms is not a new issue, it is one that should be addressed, according to Grant Thornton.

The problems associated with such dominance were brought to the forefront in 2002 with the break-up of Anderson (one of what was formerly the "Big Five" firms) following its role in the collapse of Enron.

According to Aidan Connaughton, the consultancy's head of risk management, the failure of the world's largest companies to select alternative audit firms has fuelled the risk that, should the Big Four become the Big Three, the international markets could fall into disarray.

"Any market where as few as four firms account for an excessive proportion of the work, as is the case for the large public company audit market across the G8 and Ireland, is one which risks becoming unhealthy by limiting choice and the challenge to keep improving quality," he said.

"This is especially true in the audit market, where independence rules and conflicts of interest can make it hard for the largest companies to switch between just four firms."

Mr Connaughton said the only way to alleviate the concerns associated with the dominance is for companies to understand they have a choice of who carries out their audit.

He also said that while the introduction of the Sarbanes-Oxley Act in the US has started to open up the market there, the reality is that there have been very few changes in the way things are done. However, in France, the introduction of joint audits has proved more successful in bringing new auditors into the market.

The study looked at the audit practices of 3,304 companies with a market capitalisation of more than €508 million across the G8 economies (Canada, France, Germany, Italy, Japan, Russia, the UK and the US) and a further 28 firms in Ireland. According to the study, in France, the Big Four account for only 61 per cent of the market, while in Germany the figure is 83 per cent.

In the UK, as much as 98 per cent of audit work is carried out by the Big Four, with the worst culprit overall being Italy, where the Big Four account for 99 per cent of all audit work.

There are concerns that in a small market like Ireland it can be hard to find alternative auditors. One commentator suggested that many small practices may not have the capacity to provide services to larger firms.