‘Big Four’ accounting giants face UK probe

Almost two decades after the collapse of US giant Enron in a notorious accounting scandal, the accountancy sector is back in the spotlight, this time thanks to a string of scandals in Britain.

The sector’s so-called “Big Four” — Deloitte, EY, KPMG and PwC — have a long-established oligopoly to advise and monitor big business, experts say. But a series of high-profile corporate collapses in Britain — including retail giant BHS in 2016 and construction company Carillion in early 2018 — have put them into the crosshairs of the authorities.

The Competition and Markets Authority watchdog launched a sector review in October and is expected to report back before Christmas.

Firms need them

Firms feel they need one of the Big Four on their side. “Firms need to placate financial markets and having a ‘Big Four’ badge is one easy way to do this,” Professor Crawford Spence at King’s College London told AFP.

The Big Four audit all but one of the 100 companies listed on London’s benchmark FTSE 100 stocks index, media reports say.

Yet, the sector has seen its reputation tarnished. The Financial Reporting Council (FRC), which oversees the industry, fined PwC a record £6.5 million (Dh30.6 million) in June over auditing failures of BHS. KPMG faces a probe over its audit of construction group Carillion, which went bust in January.

The FRC — called “toothless” by a British parliamentary committee — has proposed a series of reforms for the sector. They include a possible ban on accountancy groups earning consultancy fees from companies that they also audit.