The Financial Services Authority has said the Big Four should comply with the
Combined Code on corporate governance in order to reduce the risk of collapse.
Responding to the Financial Reporting Council’s discussion paper on
competition and choice in the audit market, the FSA suggested that the Big Four
should subject themselves to the same governance controls as listed companies.
This would require a radical overhaul of the way firms are structured. In
order to comply with the Combined Code, a Big Four firm would have to separate
the function of chief executive and chairman, create a board with non-executives
to oversee the business, establish and audit committee, conduct internal audits
and review the effectiveness of internal controls annually.
‘The major auditing firms have a key role to play in the capital markets and
so it could be argued that they should be subject to the same expectations or
corporate governance and accountability as other public interest quoted
companies,’ said Kari Hale, FSA director of finance strategy and risk.
See the other responses to the FRC discussion paper
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