The UK's top four audit firms are facing a market share cap to encourage competition from smaller companies as the sector comes under increased scrutiny following a number of high profile corporate collapses.
The Competition and Markets Authority (CMA) is expected to recommend a limit on the number of large listed companies that the so-called Big Four – Deloitte, EY, KPMG and PricewaterhouseCoopers (PwC) – can audit, as well as a joint audit model, Sky News reported.
However, the recommendations, which will be announced next week following a two-month market study, will stop short of demanding a break-up of the dominant firms although the CMA could leave the idea open as a backup option.
The sector came under fire over the role of auditors in the failure of construction giant Carillon and department store BHS, which were both signed off as going concerns before they collapsed.
Recently accountants have been questioned over their involvement with companies such as Ted Baker and Patisserie Holdings.
The introduction of joint audits would see a smaller rival firm working alongside one of the dominant four on the accounts of large companies.
A CMA spokesperson said: "Our investigation is ongoing. Any reporting ahead of the publication of our provisional findings is speculation."