UK authorities on Wednesday disclosed a scrutinized monopoly in the accounting sector of the country and highlighted the dominance of the companies in an attempt to dismantle the polarisation. 

The major giants include companies like PwC, Ernst and Young, Deloitte and KPMG, which have been involved in a series of alleged scandals in the financial and accounting sector of UK. 

“Major new reforms to the UK’s audit regime will aim to safeguard British jobs, avoid company failures and reinforce the UK’s reputation as a world-leading destination for investment,” the Department for Business, Energy and Industrial Strategy (BEIS) said as it launched an industry-wide consultation on its proposals, reported AFP. 

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The government wants to replace the accounting regulator, the Financial Reporting Council, with a tough new body that has legal powers to raise quality and standards at both listed and large unlisted companies.

The Audit, Reporting and Governance Authority (ARGA) watchdog, will also have the power to split the audit and non-audit functions of accountancy firms, in order to avoid conflicts of interest.

Large companies would be required to use a smaller “challenger” accountancy firm to conduct a “meaningful portion” of their annual audit, the statement added.

And the Big Four could also face a cap on their share of audits of Britain’s top 350 listed companies if competition does not improve.

The overhaul follows a string of headline-grabbing company bankruptcies that sparked huge job losses and left the taxpayer dealing with the fallout, reported AFP. 

Notable corporate insolvencies included department store BHS in 2016, construction firm Carillion in 2018, and tour operator Thomas Cook in 2019.

“When big companies go bust, the effects are felt far and wide with job losses and the British taxpayer picking up the tab,” said business minister Kwasi Kwarteng.

“It’s clear from large-scale collapses like Thomas Cook, Carillion and BHS that Britain’s audit regime needs to be modernised with a package of sensible, proportionate reforms.”

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The sector has been blighted in recent years by a series of scandals, including EY-linked activities at disgraced German electronic payments group Wirecard.

EY faced fierce criticism for its role in the 2020 downfall of Wirecard — whose books it had been checking since 2009.

Wirecard, a financial tech company that was formerly prominent in the UK, was forced to disintegrate its assets and collapsed after being strongarmed into revealing a gap of approximately $2.2 billion from its financial books, reported AFP. 

Deloitte was meanwhile fined £15 million last year for serious misconduct after UK regulators probed its audit of British software firm Autonomy ahead of a disastrous takeover by US tech giant Hewlett-Packard in 2011.

Moreover, after investigating an audit done by Deloitte in preparation for a takeover of Autonomy, a UK-based software firm, by tech giant Hewlett-Packard in 2011, the accounting company was slapped with a fine of £15 million for practices that pointed towards misconduct.