THE HEADS of the Big Four auditors are likely to face an influential House of Lords committee next month, in a probe into the lack of competition in the audit market and the role the firms played in the financial crisis.
Watchdogs including the Financial Services Council (FRC) have submitted papers to the Lords’ Economic Affairs Committee, claiming the biggest financial services firms are able to command inflated fees through their dominance of the market.
A House of Lords spokesperson confirmed yesterday that Deloitte, KPMG, Ernst & Young and PricewaterhouseCoopers have been asked to appear before the committee, with a hearing pencilled in for mid-November. “We would expect the big four to provide a representative to give evidence,” he told City A.M.
The FRC used its Lords paper to urge the government to bar the big four from taking the Audit Commission’s workload once the quango is axed in 2013, in an effort to give work to smaller auditors.
Mid-sized firms Grant Thornton, Mazars and Baker Tilly have also asked the House of Lords to consider directly altering the market in favour of smaller companies.
Deloitte, KPMG, Ernst & Young and PricewaterhouseCoopers all declined to comment yesterday.
A spokesperson for the Audit Commission declined to comment on the whether the quango’s workload would be offered to smaller firms, saying: “Ministers have made clear their intention that the audit practice of the Commission should continue and be transferred to the private sector. We are working hard to make that a reality, including pursuing the option of an employee-owned business.”