Backlash after Big Four dodge break-up pain

COMPETITION chiefs have shied away from a break-up of Britain’s biggest bean counters following a review into the failing audit market.

regulators have said forcing the Big Four accountants to split into separate consulting and audit companies would be overcomplicated.

Instead, the Competition and Markets Authority (CMA) has called for ‘operational separation’, where audit chiefs do not get a share of profits from consulting and must answer to their own distinct board.

But critics said the CMA had missed ‘a golden opportunity’ to reform the industry following heavy lobbying by the Big Four.

It comes after an outcry over conflicts of interest following a string of scandals. Firms have failed to spot a huge black hole at Tesco, the near-collapse of the Co-op Bank and the failure of outsourcer Carillion.

The consultancy arms of KPMG, PwC, deloitte and ernst & Young earn huge profits from large companies where auditors are also supposed to be carrying out independent book-keeping checks. Critics claim it means the auditors are unlikely to ask tough questions of management.

The CMA said: ‘Given the difficulties with an immediate global structural split, the CMA is recommending an operational split.’

The CMA has said the arrangement should be reviewed after five years to see if it is working. Ministers will now decide whether to implement the proposals.

Prem Sikka, an accountancy professor at the University of Sheffield, said: ‘The CMA’s report has been incredibly diluted and it is disappointing.

‘This was a golden opportunity and the CMA had good intentions, but it’s really caved in to lobbying by the Big Four and their corporate lawyers, and to political pressure.’