The concentration of audit work "among a small number of firms" could harm Ireland's attractiveness as a location for inward investment.

According to a new survey - conducted by the International Corporate Governance Network (ICGN) in conjunction with leading global accounting firms - some 80 per cent of respondents feel there is insufficient choice in the audit market.

Asked whether there was sufficient competition in the market for auditing services, 65 per cent responded negatively. Some 83 per cent agreed that there were "structural barriers" to smaller auditing firms providing services for listed companies and public interest clients, while 55 per cent said big auditing firms were "too involved" in shaping the regulation of the industry.

Some 80 per cent of investor respondents felt they were not sufficiently involved in setting accounting standards. Over 60 per cent of these respondents said auditors did not consult them enough before the audit, while 55 per cent said insufficient attention was paid to their interests while the audit was being conducted. While most respondents believe that audits ensure fair accounting and reveal misstatements, around 85 per cent said quality could be improved.

Some 55 per cent expressed the view that there was "no consensus" on the scope and purpose of the audit in their case.

Recent scandals, such as the Enron affair, appear to have led to a positive response with 60 per cent of respondents who believe that the quality of financial reporting is improving. It also reveals strong support for the harmonisation of accounting practice between the US and Europe, with 60 per cent of respondents supporting "greater convergence" in reporting standards.

Over three quarters of respondents audited were either "somewhat satisfied" or "mostly satisfied" with the benefits received from firms auditing and over 85 per cent of respondents believed that auditing firms were "mostly or somewhat" focused on performing high quality audits.

John McCarthy, director of Professional Standards for Grant Thornton in Ireland - one of the accounting firms involved in the survey - welcomed the findings but said the problems highlighted were often a matter of perception rather than reality.

"The survey cites barriers such as lack of geographical spread, lack of industry expertise, complexity of regulatory requirements and insufficient capital. However, many of these barriers are perceptions that need to be corrected."

Minister of State at the Department of Enterprise Trade and Employment Michael Ahern warned that lack of choice in the auditing market could threaten investment in Ireland.

"Ireland's successful inward investment thrust and thriving financial services sectors have not, and cannot, survive without a competitive auditing infrastructure," he said.

The survey also reveals that just over 60 per cent of respondents agree that there is a "possible" risk of one of the large global auditing networks collapsing. Mr Ahern warned that this could worsen the lack of competition in the industry.

"With only four large global players in the audit market in Ireland, a single case taken against even one of these could have the capacity to bring down that firm."

Survey responses were drawn from 76 respondent organisations representing, mainly, consultant and investment firms from Europe and the US.