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The chairman of the CMA, Andrew Tyrie, said: “If the many critics of the audit process are right, it is not just the companies that buy audits that lose out, it is the millions of people dependent on savings, pension funds and other investments in those companies whose audits may be defective.”
The review will look into whether the so-called ‘Big Four’ auditors – PwC, Deloitte, EY and KPMG – have an anti-competitive hold on the audit of major companies.
Despite measures introduced in 2015 following the earlier probe, the CMA said the largest UK companies “still turn almost exclusively to one of them when selecting an auditor to review their books”.
The CMA will also assess whether this quartet is ‘too big to fail’, and whether the practice of companies picking their auditors produces less robust audit results.
The launch of the market study followed a letter from Greg Clark – secretary of state for business, energy and industrial strategy – to Tyrie requesting that the CMA step in.
He referred to the recent high-profile corporate bankruptcies of Carillion and BHS and the subsequent concerns raised about audit quality.