The Financial Reporting Council (FRC) of United Kingdom released letters to big four (Deloitte, EY, KPMG ve PWC) for unbundling audit and consulting operation.
The basis for the FRC’s step goes back to Competiton and Markets Authority’s (CMA) recommendations in 2019 to separate those two services traditionally provided by the big four. The CMA pointed out that the provision of audit and consulting services under a single umbrella provoked dominance and conflict of interest issue. The UK Government has not initiated a legislative framework, yet the FRC is determined for the separation to tackle the problems and intends to motivate the firms to take the step for break up on their own will.
Under the FRC’s proposal, audit and consulting would be provided as completely independent businesses managed by separate boards and chairs. Additionally, the partners in those businesses would not be benefitting from shared pool of earnings.