In a recent research survey by Intelligence Consultants on the use of the
services of auditing firms by various Non Governmental Organisations
(NGOs) in Kenya, the findings were as follows:
Out of those NGOs which used P & M Auditors in 2001 financial year, 10%
switched to D & T Auditors. 10% switched to Best Auditors and 10%
switched to Excel Auditors. Out of those which used D & T Auditors in the
same financial year, 20% switched to Best Auditors and 10% to Excel Auditors.
Out of those which were using Best Auditors only 10% switched to Excel
Auditors. Out of those which used Excel Auditors, 20% switched to P U M
Auditors, 10% to D & T Auditors and 10% to Best Auditors in 2002 financial
year. It was further found that the market share of P & M Auditors, D & T
Auditors, Best Auditors and Excel Auditors was 20%, 30%, 40% and 10%
respectively.
Required:
(i) Determine which auditing firm(s) are likely to audit more and less
NGOs in the 2003 financial year. (10
marks)
(ii) Explain some of the possible actions for the audit firms, which might
experience reduction in market share. (3 marks)