Plans to reform auditing market are ‘troubling’ for KPMG boss

A break-up of the Big Four accounting firms would not fix the failings that led to the financial crisis, according to the head of KMPG’s European business.

John Griffith-Jones has been critical of the European Commission’s attempts to overhaul the sector, as KPMG, like its rivals, Ernst & Young, Deloitte and PricewaterhouseCoopers, faces inquiries from regulators.

Speaking to the Daily Telegraph in response to draft proposals, he said: ‘There’s no evidence that having six auditors would have made a difference. Given that four people failed to spot what was going on, I’m not convinced that five or six would have made a difference to the financial crisis at all.’

However, Mr Griffith Jones admitted that contact with regulators had ‘drifted away’ in the lead-up to the crisis.

The proposals, which go to the European Parliament next month, set out new rules that could force the accountancy firms to choose between audit and non-audit services.

According to the Financial Times, it means that companies with balance sheets greater than €1bn would be forced to hire two auditors to conduct a ‘joint audit’ of their books, including at least one firm outside the Big Four, and auditors will also be outlawed from working for a big company for more than nine years.