The ‘Big Four’ accounting firms have reportedly refused to back government proposals that aim to break up their dominance of the audit market.
According to the Financial Times, the firms made their opinions known in response to the public consultation on the proposals, with Deloitte, EY and PwC stating they “did not support” managed shared audits with smaller firms.
Instead, the FT reports that Deloitte and EY suggested installing a cap on the number of FTSE company audits would be a better solution – a point which has already been suggested by challenger firm BDO.
The government proposals come as it believes the firms have become “too big to fail” after it was revealed they currently audit all of the FTSE 100 and 90% of the FTSE 250.
The firms have also been criticised for the quality of their audit work including the decision to sign off on the accounts of Carillion before its collapse in 2018.
It is reported that fellow Big Four firm KPMG also believes the shared audit proposals will fail to improve audit quality. Michelle Hinchliffe, KPMG’s UK chair of audit, told the publication that the current proposal could lead to the duplication of work and increased costs for businesses.
Kevin Ellis, chair and senior partner of PwC UK, also told the FT: “We’re up for change but I think it’s got to be change we can identify as a quality improvement. I’m not sure that the corporates in the UK that we audit, particularly the international ones, will want a different set of rules here.”