Accounting professor: break up the Big Four audit market

A high-profile academic has called for the big accounting firms to be
stripped of their bank audits and for an independent enquiry into the
‘continuing failure of auditors to deliver meaningful audits’.

Prem Sikka, a professor of accounting at Essex University and a vocal critic
of the profession, said that the Big Four firms had given banks a clean bill of
health and were now lobbying the government to provide them with more protection
from lawsuits.

‘Auditors already enjoy too many liability concessions,’ wrote in an article
for The Guardian. ‘They can trade as limited liability companies and thus limit
the liability of their owners. However, auditors are not keen to relinquish the
tax perks available to partnerships, or provide meaningful information about
their business.

He added: ‘The government could reform the audit market by breaking up the
big firms. It could remove them from the audit of banks and insurance companies
and delegate that task to a dedicated regulator.’

It could award audits of public bodies to medium-size firms and thus ensure
they develop their expertise and challenge major firms … Rather than awarding
further liability concessions to auditing firms there should be an independent
inquiry into the continuing failure of auditors to deliver meaningful audits.’

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Time
to count the cost of failure