Lords to quiz Big Four auditors over their role in banking crisis
THE HOUSE of Lords has launched a wide-ranging review into the role of the Big Four accountants in the financial crisis.
The economics affairs committee will probe auditors PwC, Ernst & Young, KPMG and Deloitte over whether they could have done more to alert investors to the risks in the banking system.
The review piles more pressure on the accountants, who have already been criticised for their “worrying lack of skepticism” when auditing financial institutions by the Financial Services Authority.
The issue of competition between the firms is also under investigation by the House of Commons Treasury Committee, and the Financial Reporting Council said in June that competition in the industry was insufficient.
Lord MacGregor, chairman of the Lords committee, said: “The auditing industry has been dominated by a very small number of players for some time now. We will look at the scope for promoting more competition.”
The Lords are inviting responses to the probe by 24 September, and will make recommendations later in the year.