A Clubby Oligopoly That is Overdue for Reform

Fifteen years after the collapse of Enron, the big names in the corporate auditing sector are once again under the microscope. This week, a Florida jury has been hearing testimony in a $5.5bn lawsuit against PwC, the largest civil claim against a Big Four accounting firm to reach trial. At issue is whether PwC should have to compensate Taylor, Bean & Whitaker, a failed US mortgage lender, for failing to detect and stop a multibillion-dollar conspiracy between its executives and those at Colonial Bank, which also collapsed in 2009. The case, while far less well known than Enron, could have far-reaching effects on a clubby oligopoly that has long dominated auditing despite repeated waves of accounting scandals. Right now, the Big Four firms audit 98 per cent of FTSE 350 companies and 95 per cent of the Fortune 500.