According to the report, 82 percent of large public companies saw their choice of auditor as limited to three or fewer firms, and about 60 percent viewed competition in their audit market as insufficient.

But despite the limited choice, large public companies surveyed said that smaller accounting firms lacked the capacity and technical expertise they wanted in an auditor. In comparison, most small public companies reported being very satisfied with their auditor choices available to them.

The report also found that most smaller accounting firms are not interested in large public company clients. The minority of firms that are interested in expanding their clientele to the larger companies said increasing their name recognition and finding qualified staff are their most significant challenges.

While audit fees have increased significantly since Sarbanes-Oxley's passage, the higher cost is associated with increased audit quality, according to public company officials surveyed by GAO.

Academics and business groups have proposed to reduce audit market concentration and address challenges facing smaller accounting firms, including capping auditors' liability and creating an office to share technical expertise.

A 2003 audit concentration study conducted by GAO confirmed Big Four dominance and the reluctance of smaller firms to audit large companies.

Last April, Grant Thornton CEO Edward Nusbaum called for an audit concentration study, arguing "more accounting firms means greater competition and increases quality and lowers costs to the end user."