UK Lords Committee Calls for Competition Probe into 'Big Four' Auditors
The House of Lords Economic Affairs Committee reports its findings following an eight-month investigation into the audit market. There are three main areas of findings:
The committee calls on the Office of Fair Trading (OFT) to hold a detailed investigation into the audit market with a view to a possible inquiry by the Competition Commission. It recognises that the global reach of the Big Four audit firms – Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers (PwC) – goes beyond the scope of national authorities, but considers that the UK should take a lead since London is a major global financial centre where the Big Four are particularly prominent.
Committee chairman, Lord MacGregor of Pulham Market, said: “Our inquiry has revealed widespread concerns about the Big Four’s dominance and the risk that they could become the Big Three. Our report makes several recommendations to reduce this dominance but we feel that this market concentration is of such significance that a thorough review of the issues by the OFT and possibly the Competition Commission is now overdue. Equally important is our support for regular meetings between auditors of financial institutions and regulators to avoid the serious failures of communications between the two which were so starkly revealed by the evidence to us and which contributed to the financial crisis.”