The Guardian: Why the Big Four do not deserve our sympathy: “PwC, KPMG, Ernst & Young, and Deloitte”: “Lawyers crawling all over them; billion-pound legal suits.”: “…she has turned down the pleas of auditors who want protection from legal actions that might put them out of business.” (ShellNews.net)

Auditors' cosy world demands a review

Wednesday September 8, 2004

So Patricia Hewitt has bowed to the greater power of the Treasury. To her credit she has turned down the pleas of auditors who want protection from legal actions that might put them out of business. It is a decision that has been a long time coming but is welcome nonetheless.

The secretary of state for trade & industry, the accountants firmly believe, was all in favour of inserting the precious clause in the Companies Bill. Ms Hewitt agreed with the Big Four firms - PwC, KPMG, Ernst & Young, and Deloitte - that any one of them might end up on the scrapheap like Arthur Andersen should they make the slightest mistake. Lawyers crawling all over them; billion-pound legal suits. Then there would be three and what a disaster that would be.

But Gordon Brown appears to recognise that auditors, who have lived an easy life, deserve little sympathy just because the corporate waters are now a little choppy.

The chancellor also knows that the accountants have powerful enemies in parliament, especially on the Treasury select committee, and among the investment community. They dislike the cosy world that now exists in the profession, which has created a situation whereby 98% of the top 350 firms are audited by the Big Four.

Ms Hewitt is planning to let auditors off the hook with a licence to write individual "capping contracts" with their clients. In answer, the chancellor should take up our previous demand for a review that could break up the Big Four, saving us from further blackmail demands.

http://www.guardian.co.uk/business/story/0,,1299334,00.html