An interesting article this week questions whether the government could afford to indict one of the remaining Big Four firms. If KPMG (which has already admitted culpability in a major tax case) were indicted and (inevitably) fired by most clients, who would replace them? Here are two choice quotes:
- "Still, most believe an indictment is unlikely... Boards would be loth to retain an indicted auditor, especially after seeing former directors of Worldcom and Enron pay millions of dollars out of their own pockets to settle investors' lawsuits stemming from accounting scandals."
- "Already, regulators worry that there are to few auditors for the industry to be competitive. The Big Four dominate the audit of big, listed multinational companies because second tier firms lack the capacity and the international networks needed for the job. In certain industries, such as oil and gas, concentration is especially acute, with only two or three auditors ruling the market."
We live in peculiar times.