The Big 4 audit firms keep failing. Now they’re being forced to change
The UK accounting watchdog has given Deloitte, EY, KPMG and PwC four years to split their audit and consulting businesses in an effort to improve corporate reporting following a string of high-profile accounting scandals.The move is meant to ensure that audit practices are focused on “delivery of high-quality audits in the public interest,” and do not depend on financial support from the rest of the firm, the FRC said.
The news comes just weeks after Germany’s Wirecard (WCAGY) filed for insolvency following the discovery of a $2 billion hole in its accounts. The scandal has raised questions over how the payments company’s auditor, EY, could have missed the accounting irregularities for so long and led to fresh scrutiny of the sector.