Breaking up the Big Four? – April 18
Following the publicity from FRC chief executive, Stephen Haddrill’s comments that the Competition and Markets Authority (CMA) should look into the possibility of breaking up the Big Four to create “audit only” firms in a bid to enhance competition in the sector, we released figures on the performance of the Big Four in the UK consulting market.
The timing and strategy of releasing this data after Haddrill’s announcement was specifically connected to concerns from critics that a Big Four audit could be compromised if it secures large additional fees from the same client by doing consulting work, and that firms are too focused on consulting, and not enough on audit.
The Source Global Research figures revealed that the consulting arms of accounting firms—a group dominated by the Big Four—continued to dominate the UK consulting market, growing by 7.3 per cent to £3bn in 2017, compared to the wider consulting market growth of 6.1 per cent to £7.8bn during the same period. The figures were widely picked up by the media, with news pieces in the likes of The Times, economia, and Accountancy.
The data formed part of the Source UK consulting market report. The report said that the consulting arms of accounting firms account for nearly 40 per cent of all revenues earned.
Fiona Czerniawska, Director of Source Global Research said:
“The Big Four have once again outperformed the competition in the UK consulting market. Their size allows them to offer a great breadth and depth of both sector and service line knowledge, which may make them a natural fit for the rapidly growing digital transformation market. However, it’s not at all certain that they will ultimately be successful in staking out this territory all for themselves, as many clients still see them offering less technology expertise than traditional technology firms and less strategy expertise than strategy houses.”Back