UK's Big Four accountants to learn their fate
LONDON, July 19
LONDON, July 19 (Reuters) - Britain's "Big Four" accountants will find out on Monday to what extent their dominant grip on the UK market will be loosened to offer smaller rivals a better chance of competing.
KPMG, Deloitte, PricewaterhouseCoopers and Ernst & Young check the books of nearly all top UK companies, with some sticking with the same accountant for decades.
The auditors are under the gun for giving banks a clean bill of health just a few months before several lenders had to be rescued by UK taxpayers in the 2008/09 financial crisis.
Britain's Competition Commission outlined in February measures it was considering taking to end long and cozy relationships between the UK's top 350 listed companies and the Big Four accounting firms.
Possible actions included making it mandatory for companies to put out their audit work to public tender every five to seven years, or to change auditor every seven to 14 years.
The watchdog has also looked at giving investors a bigger role in selecting the auditor and other measures to ensure accountants are sceptical of what customers tell them.
The watchdog may go further than the auditing regulator, the Financial Reporting Council (FRC), which has a new rule requiring companies to consider putting out their audit work to tender at least once a decade or explain publicly if they don't.
The Big Four say there is plenty of competition and point to downward pressure on fees and more companies retendering their book-keeping since the FRC made its rule change.
Critics say steps by the watchdog will simply see more switching among the Big Four as rivals are too small to handle many of the blue chip companies with operations across the world.
But the competition watchdog is under political pressure to act as it was a House of Lords inquiry which led to the sector being referred to the competition authorities.
Britain's hand may be forced in any case.
The European Union is approving a law that would make switching auditors compulsory, and ban auditors from offering some advisory services to customers whose books they check.
Meanwhile, in the United States, the House of Representatives voted on July 8 to block the country's auditor industry watchdog from forcing companies to switch accountants.
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