The Big Four could face scrutiny from the UK’s Competition and Markets Authority (CMA) following the appointment of Andrew Tyrie as its new chair.
Tyrie has described the Big Four as an “oligopoly” and has reportedly said the lack of competition within the audit market is something that needs to be looked into.
The idea of breaking up the Big Four was suggested earlier this year in the UK when KPMG and Deloitte were questioned by members of the UK parliament about their role in the collapse of Carillion. This was prompted due to the concerns about their impartiality when providing both auditing and advisory services to the company.
The lack of trust in the Big Four has grown over the last few months, which led to the UK’s Financial Reporting Council (FRC) to review its sanctions for when poor audit work is conducted by a Big Four firm.
The FRC suggested that the amount of fines should be increased to £10m ($13.9m) or more for seriously poor audit work. The review in the sanctions also suggests that non-financial penalties should be implemented such as excluding perpetrators from the accounting profession for a minimum of ten years for dishonesty.
Tyrie’s comments presents another angle from which the Big Four are being scrutinised, not just from the questions raised on their ability to offer impartial auditing services, but also due to their dominance within the industry.
Following the approval of the UK’s Business, Energy and Industrial Strategy Committee, Tyrie is due to take up his position in June.
