In our interview with financial journalist Ian Fraser this week, he explained who the Big Four accountancy firms are: KPMG, Deloitte, PwC – Price Waterhouse Cooper and EY – Ernst & Young. Hit play for the relevant section below.
After widening their scope from accounting to becoming ‘consultancy supermarkets,’ they ‘hoovered up their rivals’ and became ‘unassailable’ explains Fraser. This dominance has waged for a long time, and they are considered by governments and corporations to be the only ones able to perform the job of auditing large firms.
However, this has led to a variety of conflicted interests and little choice. The Big Four are involved in many aspects of business with opposing interests – including auditing, insolvency, pensions management and more. Further, they have been responsible for giving a clean bill of health to some of the most world’s most egregious and disastrous organisations including banks like HBOS before the crash, and companies like Carillion.
Fraser explains these firms are holding governments around the world to ransom because they are unable to shut them down – fearing that losing one of the Big Four would leave even less competition and more conflict of interest – resulting in small penalties for high levels of failure.
KPMG were chosen to assist with the Grenfell inquiry before a joint letter from MPs and academics raised concerns over a conflict of interest arising from their work auditing Celotax – who provided insulation at Grenfell, Rydon – who were responsible for refurbishing the Tower, and the Royal Borough of Kensington and Chelsea itself.
In the case of Carillion, Fraser feels there is no firm that can act without conflict of interest in the liquidation of the company.
The Big Four are another layer of concentrated power along with big banks and the handful of firms handed public contracts in the UK recent years. It flies in the face of ideas of competition and efficient markets, as these large firms are instead repeatedly given contracts despite poor performance and failure, because of their sheer size and lack of competitors.