The Big Five firms came under the spotlight last month when a Radio 4 programme questioned the integrity and quality of their audit work, citing high-profile company fiascos, such as Independent Insurance and Equitable Life.
Barry Gardiner, MP and former insurance practitioner, who has also led a House of Commons debate on the collapse of Independent Insurance, claimed that auditors aren't picking up on mismanagement that companies are trying to cover up. 'When we think of an audit we think of something that is going to pick up those very shortcomings; the modern audit process is ill-equipped to do that,' he said.
Much of the blame was laid on cost-cutting because of fierce competition and independence issues. One accountant, who has worked in the audit profession for the last 10 years, admitted: 'You have to skip lots of corners.'
Prem Sikka, professor of accounting at Essex University and a well-known critic of the profession, said that the relationships between company directors and the auditing firms are too cosy to be classed as independent.
He said: '[Auditors] are puppies and poodles of company management because they are selected and remunerated by directors. The auditor then performs other services, and in many cases directors are the former partners of the accountancy firms who are now doing the audits, so I would argue auditors are not really independent at all.'
The Big Five firms did not take part in the debate, and ICAEW secretary general John Collier was left to defend the profession. 'Independence is an attitude of mind,' he said. He also pointed out that such high-profile cases are rare.