Audit watchdog launches inquiry into Big Four after sector’s ‘underlying fall in trust’
THE competition watchdog has launched an inquiry into the embattled audit sector after a string of scandals highlighted various concerns about the industry.
The Competition and Markets Authority (CMA) said it will examine the industry amid concerns it is “not working well for the economy or investors”.
The announcement comes just a day after the audit watchdog said it might ban accountancy firms from conducting lucrative consultancy work in an attempt to tackle the “underlying falling trust” in business. The decision piles further pressure onto the socalled “Big Four” firms Deloitte, PwC, EY, and KPMG. They have faced calls to be broken up ever since the collapse of Carillion earlier this year.
The CMA pointed to Carillion’s collapse and said its move follows “growing concerns about statutory audits”.
MPs accused the accountants of “feasting on what was soon to become a carcass” when advising Carillion in the decade before its fall, when the four collectively made more than £71m.
A key area of the inquiry will be looking at choice given that “the largest UK companies still turn almost exclusively” to one of the Big Four.
Another strand will look at whether the four accounting giants are “too big to fail”. Spokesmen for the Big Four and the FRC each said they welcomed the move yesterday.