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UK to press for shake-up of Big Four auditors (FT)

8 October 2018


FT title: UK to press for shake-up of Big Four auditors

FT subtitle: Business secretary Greg Clark asks CMA to consider probe into industry

The government has called for a sweeping review of Britain’s auditing industry, raising expectations that it would back major reforms in a scandal-hit sector dominated by the so-called Big Four firms.

The role of the leading audit companies in the recent collapse of outsourcer Carillion and retailer BHS has raised significant concerns about the way the sector operates, business secretary Greg Clark said in an interview with the Financial Times. “It’s right to learn the lessons and apply them without delay,” he said. 

He has asked Andrew Tyrie, head of the Competition and Markets Authority and a former Tory MP, to swiftly examine competition in the audit industry dominated by Deloitte, PwC, EY and KPMG. 

Separately, he has asked John Kingman, a former Treasury official and chairman of Legal & General, to consider ways to remove conflicts of interest, including whether the auditors of large listed companies should be appointed by a public body. Sir John is already conducting an independent review of the Financial Reporting Council. 

Mr Clark said he wanted to consider the conclusion of both inquiries in tandem and has indicated he would act on the recommendations and was ready to legislate if required. 

“There are questions about the competitiveness of the audit market and there are questions about conflicts of interests,” Mr Clark said, adding that he wanted to make urgent progress on the issue. 

Sir John’s review is scheduled to be completed before Christmas, while Mr Tyrie may make recommendations for reform in the sector without conducting a more time-consuming full market study. 

Mr Tyrie pointed out that the CMA was independent, but said: “The CMA has been considering for some time how best to contribute to the work being carried out to improve audit.” 

Mr Clark is anxious to address wider questions of public faith in free market capitalism, including whether shareholders, employees and customers can rely on the quality and rigour of the auditing companies.



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