SECOND TAKE: FT'S LEX
THE LEX COLUMN: Big Four auditors: terms and endearment
Enforced rotation and greater competition will tackle the cosy accounting clubs
Term limits are the bane of authoritarians — and auditors. Vladimir Putin spent four years as Russia’s prime minister before a third stint as president from 2012. The UK’s accounting watchdog has warned against similar wheezes to sidestep European rules requiring large companies to switch auditors every 20 years. Quite right. Under scrutiny are US banks with big London operations. The Financial Times reports one suggestion that Goldman Sachs, audited by PwC since 1922, could hire a smaller accountancy firm for part of its European audit — while still relying on PwC for the bulk of the work. Nice try. Hopefully such “top slicing” will go nowhere. PwC’s rivals have cried foul. The UK’s Financial Reporting Council has told accounting firms that arrangements amounting to “a rotation in form but not in substance” are not welcome. One positive result of the mooted Goldman Sachs’ plan could be a strengthening of the case for breaking up the Big Four auditing firms. Big companies’ choice of...