With regulators in Britain warning companies to draw up contingency plans in case one of the big four accounting firms collapses, attention is again drawn to the unhealthy dominance of the big players in the audit industry.

Duke University law professor James D Cox has a paper worth checking out. The Oligopolistic Gatekeeper: The US Accounting Profession says that the industry's poor structure is what led to its problems.

And although Sarbanes Oxley does address some of the issues, it falls short in certain areas.

Cox, for example, looks at how that structure contributed to the financial and accounting scandals of 2001 and 2002 by allowing mangers of audit clients to trade off better audits for consulting services. The result: Sarbanes-Oxley.

But Cox points out that the Act does not bar all consulting for audit clients, only certain types of services. It allows some non-audit services, provided they get prior approval from the audit committee and it does not sunset client-auditor relationships by requiring periodic rotation. Also, there is little evidence that public companies are asking for greater independence from their auditors.

What Cox doesn't seem to take into account is that audit committees tend to be a lot more cautious and rigorous these days.

Still, reading through his findings, it becomes clear that a lot more work needs to be done.