Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Britain looks at alternatives to joint audit reform

Stock Markets Nov 25, 2019 12:21PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Britain looks at alternatives to joint audit reform

By Huw Jones

LONDON (Reuters) - Britain's business ministry said it was looking at options for reforming accounting in a sign that a radical overhaul outlined by competition authorities to improve standards may be eased.

Sky News reported on Monday that ministry officials say a central recommendation from the Competition and Markets Authority (CMA) in April that Britain's top 350 companies should hire two auditors was "dead in the water".

One of the auditors would have to come from outside the Big Four, the collective term for PwC, Deloitte, KPMG and EY that dominate auditing.

Both auditors would be fully liable for each audit but some industry officials say joint audits are impractical as auditors outside the Big Four do not yet have the resources to shoulder full legal responsibility for a string of major clients.

The CMA reviewed auditing after failures at builder Carillion and retailer BHS raised questions about audit quality, but the government has yet to say if it will implement the recommendations.

"As part of our ongoing consultation on audit market reform, we are discussing a range of policies with the industry," a business ministry spokesman said in response to the Sky report.

"It will be for ministers to determine the policy once a new government is formed."

Britain goes to the polls on Dec. 12 and legislation would be needed for mandatory changes, with Brexit eating into parliamentary time.

Simon Dingemans, chair of the Financial Reporting Council, the audit sector's regulator, said in July he was not convinced that joint audits were the answer.

Michael Izza, chief executive of the ICAEW, a professional accounting body, called on Monday for "proportionate and practical" measures for reforming auditing given the global considerations for Britain.

The CMA, which had no comment, wants to meet with auditors, who say Big Four market share caps or "shared audits" would be more workable, an industry official said.

Shared audits refer to a main auditor, typically one of the Big Four, being liable for the audit, while a smaller auditor such as BDO, Grant Thornton or Mazars would audit part of the company but without the burden of liability.

"A number of challenger firms think that shared, rather than joint, audits are a sensible way to grow their business in the hope that they become realistic challengers to the Big Four in the fullness of time," Izza said.

The CMA rejected market caps but recommended that the Big Four should run their audit and more lucrative consulting arms separately to avoid conflicts of interest.

The opposition Labour Party said in its election manifesto that if in government it would implement this.

Britain looks at alternatives to joint audit reform

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email