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Parliamentary questions
PDF 105kWORD 19k
18 December 2018
E-006354-18
Question for written answer E-006354-18
to the Commission
Rule 130
Ramon Tremosa i Balcells (ALDE)

 Subject:  Possible distortions involving the big four auditing companies Deloitte, EY, KPMG and PWC --competition problems and conflicts of interest in the sector

The auditing industry is dominated by four big companies: Deloitte, EY, KPMG and PWC(1). These companies(2) tend to fulfil contracts with public institutions and are considered as reliable independent assessment bodies.

However, the increasing share of the auditing market among few players has caused concerns in the UK, where the Competition and Markets Authority (CMA)(3) has proposed that audits of the UK’s FTSE 350 companies should be carried out by at least two firms, one of which should be from outside the aforementioned ‘big four’(4).

Moreover, the CMA is considering a possible market share cap to ensure that certain major audit contracts are available only to other firms(5).

In mainland Europe, concerns were raised after one of the big four secured the valuation contract for the Banco Popular resolution, whose three independent valuations indicated significant losses.

Some believe that it is urgent to tackle the deep-rooted competition problems and conflicts of interest in the sector(6) (7).

1. Does the Commission see the increasing dominance of the big four as a possible market distortion?

2. What steps has it taken to address these competition problems and conflicts of interest?

3. Does it plan to take measures, including forcing accounting firms to legally separate the staff reviewing the accuracy of companies’ financial statements from the rest of their businesses?

(1)https://www.theguardian.com/business/2018/dec/18/big-four-accounting-groups-escape-breakup-threat-from-cma
(2)https://www.thetimes.co.uk/article/audit-overhaul-threatens-to-split-up-the-big-four-hhd3qsfm5
(3)https://www.ft.com/content/836a7230-0223-11e9-9d01-cd4d49afbbe3?desktop=true
(4)https://www.bloomberg.com/news/articles/2018-12-18/not-quite-a-breakup-big-four-auditors-avoid-drastic-measures
(5)http://visar.csustan.edu/aaba/LabourPolicymaking-AuditingReformsDec2018.pdf
(6)https://www.ft.com/content/836a7230-0223-11e9-9d01-cd4d49afbbe3?desktop=true
(7)https://www.ft.com/content/73a7bb34-c338-11e8-8d55-54197280d3f7

Last updated: 17 January 2019Legal notice