PracticeAuditLords to hear top six firms on audit reform

Lords to hear top six firms on audit reform

Big Four-only covenants likely to be discussed

Medium

A showdown has been planned for the UK’s top six accounting firms when evidence is heard at a House of Lord’s inquiry into audit reform.

The House of Lords Economic Affairs Committee will take evidence from the heads of the Big Four – PwC, Deloitte, KPMG and Ernst & Young – followed by their mid-tier rivals – BDO and Grant Thornton – during its inquiry into audit competition.

The mid tier firms are expected to appear in two weeks, followed by Big Four representatives two weeks later.

Accountancy Age understand the firms will likely be asked about so called “Big Four-only” covenants, which force large companies to use only the top four accounting firms.

These clauses, buried within the detail of large credit agreements, force companies to select only Big Four auditors. The situation is seen as unfairly favouring the Big Four at the top end of the market, and stopping smaller firms from competing.

The House of Lords also wants to speak with Treasury officials and representatives from companies and investor groups before the inquiry concludes. The committee hopes to publish its full report just after Christmas.

Further Reading:

Lords may look into audit reform: McFall

Lords kick-off audit review tomorrow

Big-Four-only clauses are rare: BBA

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