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BDO and Moore Stephens Merger Pressuring Big Four

Tue, 21st May 2019

Merger talks between Moore Stephens and BDO could put pressure on other major accounting firms. The plans would be a part of an attempt to create a fifth company capable of offering advice to FTSE 100 firms, and it would create a business that is bigger than Grant Thornton.

To date, Grant Thornton has struggled to break into the market of advising the companies listed on the UK’s leading index, but the combined power of Moore Stephens and BDO may be enough to overcome those hurdles.

Talks between the two groups are understood to already be advanced, although it is not clear whether any moves will be made in the near future. The news of the talks comes at a critical time for the accounting industry, which has been faced with increased scrutiny in parliament of late, after a series of scandals relating to the financial management of Patisserie Valerie, Carillion and BHS. The government is calling for a comprehensive review of the auditing industry in the UK, and business secretary Greg Clark says that it is right to learn lessons from recent events, and apply them as soon as possible.

The Competition and Markets Authority began an investigation into quality and choice within the audit industry last month, and a separate inquiry into the audit industry was recently launched by the parliamentary business committee. The second enquiry is being chaired by Rachel Reeves of the Labor party, and she is due to take evidence from auditors and clients alike next month.

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