The three horsemen of the apocalypse?

The premise was simple: take a hypothesis, such as making drugs legal or
allowing human cloning, and project the potential implications of that theory
becoming a reality into the near future. The results were often dystopian – but
then again if everything came up smelling of roses, I guess it wouldn’t make
very good TV.

I am still waiting for the episode entitled If…one of the Big Four went
under. Perhaps the subject just isn’t considered sexy enough for the small

But where the BBC has backed away, the Department of Trade and Industry has
stepped into the fray, commissioning a study that will look at competitiveness
issues, including the consequences of the top tier of the profession operating
as a Big Three. The results are expected next year.

It will be interesting to learn, after all the posturing from the Big Four
over how the profession would suffer immense damage to competitiveness if one of
them was to disappear, whether – in the DTI’s eyes at least – things really
would be that bad.

After all, there are currently signs of an appetite from the mid-tier firms
to take on their larger competitors for audit clients, at least in the FTSE350.
Should one of PricewaterhouseCoopers, Deloitte, KPMG or Ernst & Young go the
way of Andersen, there will suddenly be a lot of companies looking for a new
auditor, and a lot of auditors looking for a new firm.

While a Big Three would no doubt snap up some of the largest clients,
resourcing difficulties and conflicts of interest would restrict their ability
to absorb the fallout completely, leaving ample opportunity for the mid-tier
firms to go after larger clients, and even some truly global ones.

After all, with liability limitation supposedly just around the corner, it
may be seen as a less risky move than previously. Instead of a Big Three, we
could end up with a Big Five or Big Six again.

Then again, it could turn out to be the nightmarish future the Big Four
predicts. Only the DTI, or time, will tell.

Paul Grant edits the audit page

Related reading