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March 30, 2011 at 07:00 AM
On Wednesday, a parliamentary report from Britain called for an investigation by the nation’s competition authorities to learn why the “Big Four” auditing firms did not warn supervisors regarding banks before the financial crisis hit. The four are PwC, Deloitte, Ernst & Young and KPMG.
According to a Reuters report, the House of Lords issued a report that questioned the lack of warning before the crisis, and alleged that auditors failed in their responsibilities. "The Big Four's domination of the large firm audit market in the UK is almost complete: in 2010 they audited 99 of the FTSE 100 largest listed companies, which change auditors every 48 years on average," the report said in part. It went on to say, "It is clearly an oligopoly with all the attendant concerns about competition, choice, quality and conflict of interest. It gave no warning of the banking crisis."
The report asked the Office of Fair Trading to investigate the audit market and keep in mind the potential for a deeper investigation by the Competition Commission, which is more powerful.
John MacGregor, chair of the panel that issued the report, was quoted as saying, "We feel it does need a broader, more sustained thorough look."
