The Big Four accountancy firms have drawn up contingency plans for a break up of their UK businesses, an option politicians and regulators are increasingly pushing to solve conflicts of interest embedded in the industry.
The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses that have called into question the quality of their work as both auditors and consultants for the UK’s largest companies.
Executives from all four and the next largest UK audit firms, Grant Thornton and BDO, said they had planned for a potential break up, in case regulators force them to spin off their audit from their consulting businesses.
Madison Marriage writes in the Financial Times that a break-up scenario could involve two options: either forcing each large firm to split into two smaller multidisciplinary firms; or making all of them spin off their consulting work to create audit-only businesses. This second option was backed by Stephen Haddrill, head of the UK accounting watchdog, in February as a potential remedy for the lack of competition in the market.
Go read what senior executives biggest concerns are regarding the proposals here.