UK business secretary Greg Clark has called for an investigation into the dominance of the Big Four in the UK audit market in an interview with the Financial Times.
Clark has asked for two investigations to be conducted; one by the UK’s Competition and Market Authority (CMA) and also for John Kingman, who is currently leading an investigation in to the UK’s Financial Reporting Council (FRC), to explore ways of removing conflicts of interest.
He told the FT he wished to review the investigations in tandem so he can act on the recommendations and put in to place legislation if necessary.
The CMA was called upon in May by the parliamentary select committee leading the investigation into the collapse of Carillion to look into the lack of competition in the audit market. CMA chairman Andrew Tyrie has previously referred to the Big Four as an ‘oligopoly’ which needs to be looked into.
A spokesperson for the CMA said it is ‘actively considering what next steps are needed’ but has not decisively announced a formal investigation.
The Big Four, along with five of the other leading firms and the Institute of Chartered Accountants in England and Wales, have held meetings over the course of the summer to develop proposals to solve some of the issues with the lack of competition.
The proposals included suggestions of shared audits, an independent body to assign auditors to FTSE 350 companies, and a temporary cap on the amount of FTSE 350 clients a Big Four firm can audit.
Over the last year the profession in the UK has faced much public and political scrutiny due to the high profile collapse of Carillion and the publication of the FRC’s report which looked at the work conducted by PwC for British Home Stores which collapsed in 2016.