Big Four could force judicial review into competition watchdog audit reforms
Several of the Big Four accountancy firms could attempt to force a judicial review of the competition regulator’s proposals to shake up the sector.
Earlier this month the Competition and Markets Authority (CMA) called for the introduction of joint audits, meaning companies would have to appoint one of PwC, EY, Deloitte or KPMG, alongside a so-called challenger firm such as Grant Thornton or BDO.
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The watchdog also called for the firms' audit arms to be split from non-audit arms with separate profit pools and management.
Several of the Big Four – Deloitte, EY, KPMG and PwC – are considering calling for a judicial review to challenge the reforms, The Sunday Times reported.
The proposed reforms received a mixed reaction from the Big Four, while business lobby group CBI said it would “undermine confidence in corporate Britain.”
EY said it could not comment on speculation but reiterated that it was “surprised” with the recommendation for mandatory joint audits.
A spokesperson for the company said: “We were surprised that the CMA has recommended mandatory Joint Audits, given the level of opposition from companies in their submissions to the market study and the lack of evidence internationally that this measure would improve audit quality or auditor choice.”
Read more: Major companies could be exempt from joint audit rules
The government has three months to respond to the recommendations.
PwC said it was not exploring a legal challenge.
KPMG and declined to comment, while Deloitte failed to respond.