Carillion shows challengers in accountancy are needed

Sir,

You indicate that the Carillion liquidation arrangements highlight “longstanding issues around the oligopoly of the Big 4 and thepotential conflicts of interest that this generates” (“PwC under scrutiny over Carillion roles”, January 17).

The key question is for how much longer the situation, which is clearly not in the public interest, is going to be allowed to continue before government and regulators take effective action.

Meaningful moves are overdue to create a more open market in which other firms are allowed to compete on a level playing field with quality and not just size determining who wins work in regulated areas such as audit.

Did the government, through the Official Receiver think, for example, of appointing a non-Big 4 firm alongside PwC, which would have helped address any perceived conflicts?

More generally, while the last coalition government set up a competition inquiry into the large listed audit market and it found it was not fully competitive, little concrete action followed.

Similarly, the less than vigorous implementation and follow-up of the European Audit Reform has meant the Big 4’s share of the FTSE 350 audit market has further increased.

New competitors need to be encouraged if we are to build capacity in the accountancy sector across a wider group of firms, reduce potential conflicts, increase innovation and ensure no firm is too big to fail.

Positive signals will encourage challenger firms to invest appropriately and reach the necessary scale. This week has again shown the costs of government and regulators not giving the matter sufficient attention.

David Herbinet

Global Head of Audit

Mazars, London E1, UK

This letter originally appeared in the Financial Times, 21 January 2018

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