Big 4 Bombshell: “We Didn’t Fail Banks Because They Were Getting A Bailout”

Big 4 Bombshell: “We Didn’t Fail Banks Because They Were Getting A Bailout”

Leaders of the four largest global accounting firms - Ian Powell, chairman of PwC UK, John Connolly, Senior Partner and Chief Executive of Deloitte's UK firm and Global MD of its international firm, John Griffith-Jones, Chairman of KPMG's Europe, Middle East and Africa region and Chairman of KPMG UK, and Scott Halliday, UK & Ireland Managing Partner for Ernst & Young - appeared before the UK's House of Lords Economic Affairs Committee yesterday to discuss competition and their role in the financial crisis.

The discussion moved past the topic of competition when the same old recommendations were raised and the same old excuses for the status quo were given.

Reuters, November 23, 2010: The House of Lords committee was taking evidence on concentration in the auditing market and the role of auditors.

Nearly all the world's blue chip companies are audited by the Big Four, creating concerns among policymakers of growing systemic risks, particularly if one of them fails.

"I don't see that is on the horizon at all," Connolly said.

The European Union's executive European Commission has also opened a public consultation into ways to boost competition in the sector, such as by having smaller firms working jointly with one of the Big Four so there is a "substitute on the bench."

"Having a single auditor results in the best communication with the board and with management and results in the highest quality audit," said Scott Halliday, an E&Y managing partner.

The Lord's Committee was more interested in questioning the auditors about the issue of "going concern" opinions and, in particular, why there were none for the banks that failed, were bailed out, or were nationalized.

The answer the Lord's received was, in one word, "Astonishing!"

Read this article in its entirety at the re: The Auditors, a blog by Francine McKenna.