KPMG, Deloitte, PwC and EY ‘stranglehold’ contributing to corporate failures, report says
Britain’s big four accountancy firms should face a full break-up to weaken their “stranglehold” on an audit market discredited by corporate failures including Carillion and BHS, MPs have suggested in a hard-hitting report.
The business, energy and industrial strategy (Beis) committee said the competition watchdog – which is due to release its final recommendations for reform of the audit industry – should consider the break-up of the country’s biggest accountants by separating their audit and consulting arms.
Between them, the four big players – KPMG, Deloitte, PwC and EY – conducted the audits at all but one of the UK’s 100 biggest listed companies last year.
“The big four’s dominance has fostered a precarious market which shuts out challengers and delivers audits which investors and the public cannot rely on,” Rachel Reeves MP, the Labour chair of the committee, said. “Our report proposes a range of measures to boost competition, improve the audit product, and ensure that the UK continues to be a world leader in corporate governance.”
The committee suggested imposing market share caps on the big four and bringing in joint audits conducted by a big four player and a challenger firm. The latter proposal is already supported by the Competition and Markets Authority.