UK lawmakers want Big Four accounting firms broken up amid audit failures

International News

Britain's "Big Four" accounting firms should be broken up to improve standards and transparency in book-keeping after audit failures at construction company Carillion and retailer BHS, British lawmakers said on Tuesday.

Parliament's business committee urged Britain's Competition and Markets Authority (CMA) to force EY, KPMG, Deloitte and PwC to legally separate audit and consultancy services.
The CMA published interim proposals last December to require a less draconian operational separation of auditing and more lucrative consultancy to avoid the former being cross-subsidised and prioritised by the latter.

The CMA has yet to publish final recommendations.

The report seeks to keep up reform momentum after past attempts to end the so-called Big Four's dominance of book-keeping made little headway.

EY, KPMG, Deloitte and PwC have sought to head off being split up by voluntarily agreeing not to offer consultancy services to audit clients..

The cross-party report said that if the CMA opts for only operational separation, it should be reviewed after three years to see if it ends cross-subsidies and improved audit quality.
"If not, we recommend that the CMA then move to implement a full structural break-up of the Big Four into audit and non-audit businesses in the UK," the report said.


 Deloitte said a structural split would harm audit quality, and could materially damage Britain's competitive position as a leading capital market. The "Big Four" are global but the reforms could only apply in Britain...Read More