RegulationCorporate GovernanceBig Four domination creates dearth of expert witnesses

Big Four domination creates dearth of expert witnesses

Lack of expert accounting witnesses caused by the Big Four all working for the same big clients and managing partners warned to co-operate with investigations

A LACK OF non-conflicted expert accounting witnesses could impact on the ability to bring litigation against the biggest firms.

The Joint Disciplinary Scheme, the accountants’ watchdog that has issued its last annual report after completing its caseload, warned that the “near monopoly” of Big Four audits of the FTSE 350 meant it was difficult to find expert accounting witnesses to help in tribunals.

The JDS said that the problem, which also affects civil litigation cases, occurs where all four firms often provide services to a single large client.

“If it is not possible to use one of the four large firms, the alternatives may be very limited,” stated the JDS.

“An example of the danger which the litigation system faces from this dependence on only four firms can be seen in the Equitable Life Assurance Society case, where the three large firms not involved were conflicted out of acting against Ernst & Young,” said the JDS’ report.

“The [JDS executive] committee believes that this is a growing problem and it will be for the authorities to decide what, if any, action should be taken to address the situation.”

The report also took a swipe at accountants who have failed to co-operate with its investigations.

In one case the JDS considered disciplinary against a managing partner for his firm’s failure to work with the JDS.

The partner concerned is not named but the report concludes: “Failure to co-operate has added to the delay in and costs of investigations, all of which have to be borne by other members and member firms.”

The report adds: “While the committee recognises that members and member firms are entitled to arrange matters thus, it also considers that managing partners, not the solicitors, are responsible for seeing that their firms co-operate with the executive counsel.”

The JDS, which has operated since 1979, was effectively replaced when new cases were passed onto the Accounting & Actuarial Discipline Board (AADB) from 2005. Equitable Life and Semple Cochrane were the JDS’ last cases, which were concluded  in 2010.

 

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