The Big Four have insisted on the importance of the continuation of their current model rather than being split up.

In responses to letters received from the select committees appointed to investigate the collapse of construction giant Carillion asking for responses to the Carillion Report, the firms asserted the need to maintain the status quo.

Despite admitting that the market for FTSE public interest entity (PIE) audit is concentrated, Deloitte said that breaking up the Big Four “would damage both audit quality and the UK’s position as an attractive capital market”.

The firm continued to say that non-audit work is essential to creating a more experienced workforce: “Delivering a quality audit requires input from experts drawn from across our firm, including industry specialists and others with expertise […] These teams build expertise through their advisory work for non-audit clients, and we strongly believe that audit-only firms would not be able to attract this talent.”

While Deloitte has said that breaking up the Big Four is not the answer to concerns about lack of competition, the firm admitted that more players are needed in the market: “The critical question for the PIE audit market is: how do we get from “four to more”? To achieve this, key structural issues in the marketplace must be addressed to encourage greater market participation.

“The debate should focus on both the supply and the demand side, looking at what can be done to provide greater incentives for firms to participate in the market and what can be done to encourage audit committee chairs and investors to select auditors who are not amongst the largest firms.”

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KPMG rejected claims that its work for Carillion was ‘complacent’ saying it “does not reflect the hard work and commitment of the Carillion audit team”.

The firm went on to defend itself further: “We understand why the circumstances of Carillion’s failure have led to public questioning of KPMG’s role, and fully accept that the auditor’s work should be subject to appropriate scrutiny.

“However, as we have said, while a company might fail following issuance of an unqualified audit opinion, this does not automatically mean the auditor did a bad job.”

While Deloitte offered possible solutions for increasing competition within the statutory audit market, KPMG did not offer any practical recommendations: “We do not share the view that changing the audit market structure is the key to driving up quality but we will, of course, take part in any debate on these complex issues, in whatever forum is most appropriate, with a view to exploring workable solutions.”

PwC followed in Deloitte’s assertion that breaking up the Big Four is not the solution: “The delivery of a high quality audit requires audit teams who are able to access a broad base of specialist knowledge (within the UK and internationally). This would be difficult to maintain in a firm which focused only on audit services.”

The firm also noted that having a multidisciplinary firm meant that it was easier to attract and retain better talent in the recruitment process by offering ‘wide-ranging experiences’ which would be more challenging to offer in a firm which only offered audit services.

PwC was appointed as the special manager in the Carillion liquidation process, which the firm stated was due to being the ‘best qualified to undertake the role’ as opposed to the claims that it was awarded the position as it was ‘the least conflicted of the Four’. The firm also noted in its response to the select committee’s that they had provided the liquidation services with a 20% discount of the normal rate, which countered a view that the firm could ‘write their own pay cheque’.

EY also backed the notion of the importance of having a multidisciplinary firm: “Our multidisciplinary model and related investments provide the structure, breadth and depth of technical skills, and industry expertise necessary to deliver high-quality audits, particularly to large, complex international businesses.”