Financial Times columnist Lucy Kellaway has published a piece encouraging UK regulators to see the positives in the fact that many leading financial executives come from one of the Big Four audit firms – Deloitte, Ernst & Young, KMPG and PwC.
Following on a UK Competition Commission report published last week that found two-thirds of all chief financial officers used to work for a Big Four firm, hampering competition, Kellaway writes that there could be under-appreciated benefits to such closeness. Someone who once worked at an audit firm — or a newspaper — knows more about how their work is done and where the potential weaknesses lie, she writes.
So an honest thumbs-up from a current employee means quite a lot. But one from a former one means even more.
Kellaway’s readers seem to see more potential pitfalls than obvious benefits in this kind of closeness, judging by the comments section.
This is a central issue for auditors, companies and accounting regulators, as independence and skeptical thinking are central to the external audit process, and something the Public Company Accounting Oversight Board (PCAOB), the U.S. auditing regulator, has said it finds lacking in too many audits.