Big Four auditors face CMA investigation

After months of criticism of the audit market and increasing sanctions for poor quality audit work, as well as high-profile failures such as Carillion, the Competition and Markets Authority (CMA) has launched an investigation into the audit sector to address ongoing concerns over the dominance of the Big Four and lack of competition.

The CMA will focus on three main areas: choice and switching; the long-term resilience of the sector; and the incentives between audited companies, audit firms and investors. It will also examine the risk of the Big Four being ‘too big to fail’ threatening long-term competition.

The authority said that while the changes put in place by its predecessor, the Competition Commission, have strengthened competition between the Big Four, FTSE companies still turn almost exclusively to one of them when selecting an auditor.