Four giant firms control most of the world’s accounting market. From Don Quijones at wolfstreet.com:
After a series of sudden corporate collapses, audit firms face a crisis in the UK.
Deloitte, one of the so-called “Big Four” accountancy firms that have effectively cornered the global audit industry, has warnedthe UK government and regulators that any attempt to break up their oligopoly could backfire. Forcing the Big Four — which also include KPMG, PwC and EY — to split could harm Britain’s standing as a global financial center just at a time when the City is straining under Brexit pressures, the accountancy firm told a parliamentary inquiry.
“The Committees, and other commentators, have suggested that the break up of the largest professional services firms should be examined as a means of increasing competition and ensuring audit quality,” Deloitte said. “We do not believe that this is a viable solution to either matter and would be concerned that it would damage both audit quality and the UK’s position as an attractive capital market.”
In April, following a string of corporate scandals and collapses, the UK’s top accounting regulator, the Financial Reporting Council (FRC), called for an inquiry to explore the possibility of breaking the audit arms of the Big Four accounting firms — KPMG, Deloitte, Ernst & Young, and Price WaterhouseCoopers — into separate pieces. Serious doubts remain as to how genuine the regulator’s stated intentions are, since the FRC faces its own government inquiry following accusations of being too soft on big accountancy firms.
The influence of the Big Four is virtually unparalleled across the industries in which they operate. Their alumni control the international and national standard-setters of the accounting industry, ensuring that the rules of the game suit the major accountancy firms and their clients. Their reach also extends deep into the heart of government. “There’s no major policy change without the big four involved,” says Richard Brooks, award-winning journalist and author of Bean Counters: The Triumph of the Accountants and How They Broke Capitalism.
To continue reading: “Big Four” Audit Oligopoly Strikes Back at Plans to Break it Up
