Lords to Hear the Top 6 Audit Firms on Reform

Lucas Gilmore, “Big 4″ observer
October 18, 2010 /

The House of Lord’s is planning a showdown for an inquiry into audit reform where top firms of the country will be asked to testify.

The House of Lord’s will be holding an enquiry about an audit reform where UK’s top 6 auditing firms will be asked to present their testimony as evidence to court.

The Economic Affairs Committee of the House of Lord’s is planning to take evidence from the heads of the Big 4 firms, namely, Pricewaterhouse Coopers, Deloitte, KPMG and Ernst & Young. Their testimony will be followed by their mid-tier rivals, namely, Grant Thornton and BDO.

The House of Lord’s is holding an enquiry into audit competition going on in the country.

The mid-tier companies can be expected to give their testimony in two weeks. It will be another two weeks before the head of the Big 4 firms are expected to testify before the House of Lord’s committee.

Inside sources from the enquiry say that the Big 4 companies will be asked about whether there is any such thing as a “Big Four-only” covenant. This covenant is a sort of an open secret in the auditing profession. It means that large companies are forced to get their auditing done by the Big 4 companies only, and no one else.

The enquiry has found that there are clauses within the agreements handed out by the Big 4 companies which state that companies will have to select only from among the Big 4 auditors.

The enquiry has been set up because the situation has been such that the market only favors the Big 4 while not letting the smaller firms compete.

The House of Lords will also be speaking to Treasury officials, investor groups and representatives from the companies during the enquiry.

 

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