Big audit firms' monopoly under fire

The European Commission is pushing for tough rules that would force the world's biggest accountancy firms to abandon their consultancy businesses and share audit work with smaller rivals.

A draft regulation, seen by the Financial Times, aims to transform the accounting sector in the wake of the financial crisis and restore "trust" in financial reporting.

It has the backing of Michel Barnier, internal market commissioner, whose officials have decided the audit world is in the grip of an oligopoly.

Under the plans, which are to be unveiled in November, companies with balance sheets greater than €1bn would be forced to hire two auditors to conduct a "joint audit" of their books, including at least one firm outside the Big Four of Deloitte, PwC, Ernst & Young, and KPMG.

Auditors will also be banned from working for a big company for more than nine years - a policy of "mandatory rotation" Barnier thinks will boost independence and stimulate competition. Some big multinationals have had the same auditor for more than a century.