A new audit era: Big Four must account for themselves in CMA shakeup
Summary
Accounting has been marred by a wave of failures, and in the wake of this the UK Competition and Markets Authority (CMA) has conducted a review of the market. A range of proposals have been put forward to combat challenges within the industry, in which the four largest auditors dominate and multiple barriers to entry prevent challenger firms from gaining a foothold. Concurrently, accounting as a discipline looks less and less effective at accurately reflecting modern businesses, and the field looks ready for reform.
Key Highlights
- Provides an outline of a number of recent financial accounting scandals: Carillion, Capita, Mitie
- Provides summary of recommendations from ongoing Competition and Markets Authority review
- Outlines potential future four statutory audit market, given ongoing competitive review and changes in accounting practises.
- Provides analysis of recent accounting scandals
- Provides summary of an ongoing Competition and Market Authority review into the statutory auditing market
- Evaluates likely impact of Competition and Market Authority review into statutory audit market - what is the future of the Big Four?
- What is the future of the Big Four?
- How will the statutory audit market change in the future
- Overview
- Catalyst
- Summary
- Accountancy’s wave of scandal
- Carillion: auditors fail to question rising accruals despite public skepticism
- Capita: frequent exceptional write-downs and dubious estimates
- Mitie: £50m material ‘errors’ arise in listed infrastructure consultancy
- The Big Four Oligopolists: global and specialist
- 2018 CMA review suggests a range of proposals
- Public body appointment of auditors - an unwelcome interference
- Joint or shared auditing - expensive for auditor and auditee
- Market Cap thresholds - the Big Four preference
- Breaking up is hard to do
- 16thc double-entry bookkeeping: not designed for intangibles
- Conclusion
- Appendix
- Sources
- Further Reading
- Ask the analyst
- About MarketLine
- Disclaimer
- List of Figures
- Figure 1: Capita auditors KPMG highlight Capita’s large intangible assets in its 2016 accounts
- Figure 2: Proposals commentary: EY
- Figure 3: Proposals commentary: PwC
- Figure 4: Proposals commentary: Deloitte
- Figure 5: Proposals commentary: KPMG
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