Big Four should adhere to Combined Code says FSA

News Article - 17 August 2006
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The Big Four auditing firms have come under pressure to comply with governance rules set out under the Combined Code.

The Financial Services Authority (FSA) said that the greater levels of corporate governance created by the code would reduce the risk that the dominance of the companies posed to the market.

It said the Big Four "should be subject to the same expectations of corporate governance and accountability as other public interest quoted companies".

Its comments came in its response to a Financial Reporting Council discussion paper on the promotion of competition and choice in the audit market.

Adherence to the code would mean radical changes in structure and administration in the firms. It would require the separation of the function of chairman and chief executive as well as an audit committee with a majority of non-executive directors.

The FSA also recommended that audit committees of businesses should be aware of the risks to their business should a major auditor withdraw from the market.

It suggested companies could be compelled to form a contingency plan should a major auditor collapse.

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