The Big Four accountancy firms have lived a charmed life. Despite repeated audit scandals their profitable oligopoly has survived intact. Now, in the light of this weeks damning parliamentary report on the collapse of UK government contractor Carillion, an overdue reckoning may be imminent.
The case of Carillion perfectly illustrates the lack of competition and conflicts of interest inherent in an audit market where the Big Four audit 99 per cent of FTSE 100 companies and 97 per cent of FTSE 250 companies. KPMG was the external auditor for 19 years, while Deloitte carried out the internal audit function and offered other consultancy services. EY provided turnround advice before Carillion was declared insolvent in January. …
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