BRITAIN’S biggest companies could be forced to switch accountants in a bid to appease angry shareholders who are fed-up with recent accountancy scandals.
The Competition Commission said the move would boost competition and end the cosy relationship between Britain’s “Big Four” accountants – KPMG, PwC, Ernst & Young and Deloitte – and the UK’s largest PLCs.
In its preliminary findings, the commission said competition is restricted because it is hard for companies to switch accountants.
It also criticised auditors for focusing on pleasing management rather than looking after investors.
The “Big Four” check the books of almost all the major UK and global companies and are often kept on the books for decades.
Laura Carstensen, who chaired the commission’s audit probe, said: “We have found that there can be benefits to companies and their shareholders from switching auditors but too often senior management at large companies are inclined to stick with what they know.”
The commission said the lack of competition is likely to lead to higher prices, lower quality and a failure to meet shareholders’ demands.
It added that there is “significant dissatisfaction” among big investors and that it will take time to change the “long-standing and entrenched” system.
It is proposing a package of reforms including forcing companies to tender their audit work every five to seven years, and change accounting firms every seven to 14 years – roughly in line with changes being discussed at the EU level.
The findings will boost a draft EU law which contains similar plans.
‘Big Four’ setback: Section 2, Page 18.