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UK competition regulator launches market study of audit sector

The U.K. Competition and Markets Authority said Oct. 9 that it has launched a study to examine whether the audit sector is competitive and resilient enough to maintain quality standards.

The review follows the collapse of construction company Carillion PLC in January and questions over the quality of its auditors.

The CMA will focus on whether the big four accounting firms — KPMG, EY, PwC and Deloitte — are a barrier to competition, and whether they are too big to fail.

"If the CMA finds evidence that the market is not working well after examining these areas, it will scrutinize all proposals for tackling them," it said.

The regulator has also written to the government about the possible need for legislation to implement its findings along with those of the independent review of the Financial Reporting Council.

The FRC said Oct. 8 that it was working with the CMA to see if the big four accounting firms should be banned from supplying consultancy services to clients whose books they check, Reuters reported.