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Deloitte, EY, KPMG, PwC back in spotlight, under probe in Britain

The sector's so-called Big Four" have a long-established oligopoly to advise and monitor big business, experts say

AFP | PTI  |  London 

Probe, IT probe
Representative image | Illustration: Binay Sinha

Almost two decades after the collapse of US giant Enron in a notorious accounting scandal, the accountancy sector is back in the spotlight, this time thanks to a string of scandals in

The sector's so-called Big Four” — Deloitte, EY, and — have a long-established oligopoly to advise and monitor big business, experts say. The engage in a wide range of activities, from accounts auditing and strategy consulting to proposed mergers and acquisitions, restructuring and taxation.

However, a series of high-profile corporate collapses in — including retail giant BHS in 2016 and construction company Carillion in early 2018 — have put them into the crosshairs of the authorities.

The Competition and Markets Authority watchdog launched a sector review in October and is expected to report back before Christmas.

Despite the controversy, firms feel they need one of the on their side as investors usually want to see their labels when they scrutinize the quality of

“Firms need to placate financial markets and having a 'Big Four' badge is one easy way to do this,” Professor Crawford Spence at King's College London told AFP. “These symbolic aspects are very important.” The audit all but one of the 100 listed on London's benchmark FTSE 100 stocks index, media reports say. “This is partly explained by the need for big listed companies to have an auditor with an network who can deal with subsidiaries overseas, partly with issues to do with brand,” added Spence.

“The ... pride themselves on trying to understand the whole business of a client, not just its audit issues. This 'rounded business knowledge' is very useful for big clients.” Yet the sector has seen its reputation tarnished in recent years, despite changes enacted since Enron's collapse in 2001, which experts say was the world's biggest accountancy scandal ever.

The Financial Reporting Council, which oversees the industry, fined a record 6.5 million pounds in June over auditing failures of BHS, two years prior to its collapse.

meanwhile faces a FRC probe over its audit work for construction group Carillion, which went bust in January, amid concerns it may have breached ethical and technical standards.

First Published: Fri, November 23 2018. 23:15 IST
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