Big Four to be questioned by House of Lords financial crisis committee

The heads of the Big Four accountancy firms are to be questioned by an influential House of Lords committee looking into the role played by auditors in the financial crisis.
 
According to the Sunday Telegraph, the leaders of Deloitte, PricewaterhouseCoopers, Ernst & Young and KPMG, are all to be questioned, after receiving a call from the committee’s secretariat enquiring into their availability.
 
Although a final decision has yet to be taken as to whether the hearing will definitely take place, if it goes ahead, the aim is to hold it at either the end of November or early in the new year. Politicians ranging from former chancellor Lord Lawson, former competition regulator Baroness Kingsmill and chairman of Lloyd’s insurance market Lord Levene are all expected to take part in the grilling.
 
Committee chairman Lord MacGregor said: “Auditing is a very high-profile issue following the financial crises and we will seek to establish whether the market dominance by a small number of auditors contributed to a failure to pick up on unsustainable risks being taken on by international banks.”
 
The Big Four are also due to give evidence to the House of Lord’s Economic Affairs Committee into audit reform at the start of November, followed two weeks later by mid-tier rivals BDO and Grant Thornton.
 
They are expected to be asked about so-called ‘Big Four-only’ covenants, which are generally buried in the detail of large credit agreements and allegedly force companies to unfairly favour large players.
 
The Committee also plans to speak to Treasury officials, company representatives and investor groups before concluding its inquiry, with the aim of publishing a full report just after Christmas.