The Big Four accountants that so dominate the bean-counting industry have come under fire from regulators for poor quality audits of big banks and building societies.
KPMG, PricewaterhouseCoopers, Deloitte and EY all found themselves heavily criticised for failing to spot the oncoming of the 2007 credit crunch and subsequent economic crisis, when they ran the rule over the numbers of the country's most crucial financial institutions.
In its 10th annual assessment of audit quality published today, the Financial Reporting Council found that examination of lenders' numbers "continues to fall below average". The Big Four are essentially accused of not learning from their past mistakes.
In particular, auditors have failed to challenge banks and building societies on the insufficient money they have set aside against potential losses on their loans.
The FRC has already launched a huge review of banking audits, so furious have they been by their findings. That report will be published in November.
Paul George, the FRC's executive director for conduct, told The Independent: "We don't believe that auditors have done sufficient work, or have sufficiently challenged banks, to satisfy our standards... they have not started making the improvements that we would have hoped for."
The report also said that IT controls on a number of bank audits were also insufficient. It said: "[W]e have concluded that, despite the focus we already give to bank and building society audits, our routine inspections are not providing sufficient incentive to firms to improve their work in this sector."
More broadly, the Audit Quality Inspections annual report found that 60 per cent of audits were either good or only required minor improvements. However, the standards were higher in the FTSE 100 index of Britain's biggest listed companies, where 86 per cent were found to be of those highest standards.
Across industry 15 per cent of all audits required significant improvement, including a FTSE 100 company where standards should always be above par.
Mr George said that the FRC was supportive of UK and European Union regulatory efforts to break the dominance of the Big Four.
After a long investigation, the Competition Commission demanded in October that listed firms put the audit role out to tender once a decade, though the incumbent accountant would still be allowed to keep the role if it was the strongest bidder.
Last month, the European Parliament went further and voted in favour of forcing companies changing their auditors every 20 years, regardless of how well the bean-counters were doing their jobs.
Regulators hope that more regular competitive processes will help mid-tier accountants, such as BDO and Grant Thornton, win work with major listed firms - or at least encourage them to bid and keep the Big Four on their toes.
"We support any efforts to broaden the structure of the audit market," said Mr George. "In the long-term it would be good to have six, seven, eight or nine accountants compete for the biggest audits."Reuse content