The UK’s Big Four accountancy firms have refused to back a government scheme that would see them share audit work with smaller firms.
Last month, Deloitte, EY and PwC said they did not support the government’s proposal for “managed shared audits” of large listed companies.
The Financial Times has reported that the other Big Four firm, KPMG, questioned how shared audits would be made to work in practice.
All of the FTSE 100 firms are audited by the Big Four; while over 90 per cent of the FTSE 250 also employ the services of the four firms.
It is thought that this domination of the market has led to the firms becoming “too big to fail”, evidenced perhaps by some high-profile mishaps in recent years.
The quality of work has been criticised as well as the decisions to sign off on the accounts of firms Carillion and Thomas Cook, both of whom collapsed shortly after.
The shared audit plan aims to help smaller firms build up their capacity and so they can compete.
Michelle Hinchcliffe, KPMG’s UK chair of audits, said the plans could lead to duplication of work and increased costs for businesses.
“However, we have previously offered to participate in a pilot and remain committed to help find solutions to these challenges,” she said.
Three years ago, plans to limit the Big Four to auditing 80 per cent of the FTSE 350 never took off.
PwC, which has more FTSE 350 clients than any other firm, told the FT that none of the current plans would improve the quality of the work.
“We’re up for change but I think it’s got to be change we can identify as a quality improvement,” Kevin Ellis, chair and senior partner of PwC UK, told the FT.
“I’m not sure that the corporates in the UK that we audit, particularly the international ones, will want a different set of rules here.”