The latest recommendation to break up the Big Four accountancy firms from the two U.K. parliamentary committees investigating the collapse of construction firm Carillion is hardly a new idea. But is it even possible? What authority does parliament, or the Competition and Markets Authority (CMA)—the agency given the job of considering the breakup—have to affect such an outcome?
The last time the CMA’s predecessor organisation—the Competition Commission—investigated the audit market, its main recommendation was to ensure that companies put out their audit for new tender every 10 years. But, according to data from proxy advisory firm Manifest, this had the effect of increasing the Big Four’s stranglehold on external audit, and they now audit 99 percent of FTSE 100 companies and 97 percent of the FTSE 250. In addition, limits on the amount of non-audit work a firm can do for a company it is already auditing do not seem to have had any impact.
