A number of the Big Four are considering seeking a judicial review of the UK’s Competition and Market Authority proposed operational split of their audit and non-audit practices, according to The Times.
It noted that a number of the firms are understood to be taking advice from law firms on whether or not they can challenge the CMA’s final proposals.
The CMA’s final report into the audit market was released earlier this month and called for an operational split of the Big Four and for mandatory joint audits. It also called for greater regulation of audit committees, which could make committees report their decisions as they hire and supervise auditors.
The final report received a mixed response, as it decided to push for some of the proposals it suggested in its update paper in December 2018, which received a widely negative response at the time.
A spokesperson for EY said: “We do not comment on speculation. EY continues to believe that the right set of comprehensive changes is needed to enhance protection for UK pensioners, employees and investors, and we remain committed to working with the CMA and other stakeholders to achieve this outcome.
“As we have previously stated, we were surprised that the CMA has recommended mandatory Joint Audits, given the level of opposition from companies in their submissions to the market study and the lack of evidence internationally that this measure would improve audit quality or auditor choice.
“We look forward to understanding the basis of this recommendation and seeing the supporting analysis. EY will continue to play an active and constructive role in all the interconnected reviews into corporate reporting and audit.”
A spokesperson for PwC said that the firm is not ‘exploring legal action’. Deloitte also said it has not actively considered a judicial review while KPMG declined to comment.