Britain unveils shake-up of its scandal-hit accounting sector

Britain unveils shake-up of its scandal-hit accounting sector

LONDON: Britain unveiled yesterday a drastic overhaul of its troubled accounting sector, with plans to break the dominance of the so-called Big Four accountancy giants. The long-awaited shake-up comes amid mounting outcry over the Big Four-comprising Deloitte, EY, KPMG and PwC-following a series of scandals in recent years.

"Major new reforms to the UK's audit regime will aim to safeguard British jobs, avoid company failures and reinforce the UK's reputation as a world-leading destination for investment,“ the Department for Business, Energy and Industrial Strategy (BEIS) said as it launched an industry-wide consultation on its proposals. The government wants to replace accounting regulator the Financial Reporting Council with a tough new body that has legal powers to raise quality and standards at both listed and large unlisted companies.

The Audit, Reporting and Governance Authority (ARGA) watchdog will also have the power to split the audit and non-audit functions of accountancy firms, in order to avoid conflicts of interest. Large companies would be required to use a smaller "challenger“ accountancy firm to conduct a "meaningful portion“ of their annual audit, the statement added.

And the Big Four could also face a cap on their share of audits of Britain's top 350 listed companies if competition