UK’s CMA Threatens Audit Firms With Extra Reforms

The UK competition watchdog has warned of further drastic reforms of the audit market if the industry continues to “oppose or undermine” its proposed shake-up of the sector, reported the Financial Times. 

The Competition and Markets Authority (CMA) issued the threat to auditors in a blog post on Tuesday, February 18, 10 months after it recommended the government introduce sweeping measures to overhaul the Big Four firms of PwC, Deloitte, KPMG, and EY.

“The current set-up is a threat to the resilience of the entire system, in the event of a firm collapsing or withdrawing. The Big Four are too few to fail,” the blog stated.

It was written by Will Hayter, senior director of the CMA and a key author of the regulator’s 2019 report into the audit market. He cautioned, “Those in the industry and elsewhere who pay lip service to the need to go ‘from four to more’ should not doubt the CMA’s resolve.” 

Mr Hayter also took a swipe at lobbying from some of the UK’s largest accountants against changes to their businesses, which has been described as “higher than during any other inquiry” by MPs and campaigners for reform. He wrote, “If they continue to oppose or undermine solutions that retain choice for audit committees, perhaps in time we should look again at the direct appointment of auditors in order to build resilience and drive up quality.”