Should the Big Four Be Split Up? Join Me in the Media Discussion

Please join me in the debate, which it's my pleasure to help take up a level.

On March 16, as reported in the Financial Times, the UK's accountancy regulator:

"called for an inquiry into whether the Big Four accountancy firms should be broken up, in a move aimed at ending their dominant position auditing the accounts of Britain’s biggest listed companies. Stephen Haddrill, chief executive of the Financial Reporting Council that regulates accountants, said Britain’s Competition and Markets Authority should investigate the case for “audit only” firms in an effort to bolster competition and stamp out conflicts of interest in the sector."

Believing as I do that vivisection of the Big Four is neither realistic nor responsive to the serious issues involved in the current state of Big Audit, I am happy to have my views be part of the FT's "head-to-head" on the subject -- see the Financial Times now on-line here, or the print edition for March 22.

As my opening there puts it:

"The recent spate of large-scale corporate accounting scandals is deeply worrying and raises a familiar question: “Where were the auditors?” But the correct answer does not involve breaking up the four professional services firms that dominate auditing."

The FT invites and will publish selected reader reactions and opinions. This is to extend the same invitation here.

 

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Comments

[Herb Chain]

Interesting question. Some thoughts immediately come to mind.

What would be the objective? Competition for audit work? Independence and conflict of interest resolution? Increasing the focus on audit alone to enhance quality? Will being “split up” accomplish these goals?

On the other hand, what would be the costs of the loss of scalability and investment in technology and industry expertise? And what about the audit support consultants and advisory personnel provide to enhance audit quality?

Whatever the answer, the solution should track the underlying issue to be solved. And not be an easy, “sound bite” solution.