Lawmakers ask 'Big Four' auditors for client dining details

By Huw Jones

LONDON (Reuters) - The "Big Four" accounting firms in Britain have been asked by lawmakers to say how much they have spent on wining and dining clients and to demonstrate a link between the pay of their partners and the quality of their audits.

Rachel Reeves, chair of parliament's business committee, has written to EY, KPMG, Deloitte and PwC with nine questions and a Feb. 27 deadline for replies. The letters dated Feb. 13 were published on Monday.

Begun in January, the committee's inquiry aims to investigate whether reforms proposed by the Competition and Markets Authority (CMA) will succeed in making the accounancy sector more competitive.

The CMA has recommended measures to inject more choice for companies when choosing an outside accountant to check their books.

A separate review has proposed a new regulator for auditors with tougher powers to improve quality after collapses at construction company Carillion and retailer BHS raised questions about how much time accountants spend on an audit.

In her letter, Reeves asks the Big Four to say how much they each spent on hospitality on audit and non-audit clients at Britain's top 350 listed companies in the past five years.

This would include expenditure on non-audit customers who later became audit clients.

Elsewhere in the financial sector, brokers are under pressure from regulators to scale back on hospitality such as tickets for rugby or tennis matches.

Accountants are also being asked to show how pay and promotion of auditors are linked to audit quality.

The committee is due to publish its report in March. KPMG said it would supply the information as requested. Deloitte, EY and PwC had no immediate comment.

(Reporting by Huw Jones; Editing by David Holmes)