Au­dit watch­dog launches in­quiry into Big Four after sec­tor’s ‘un­der­ly­ing fall in trust’

The Daily Telegraph - Business - - Front Page - By Lucy Bur­ton

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.

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