Mubasher: The UK's Big Four accounting firms, comprising PwC, Deloitte, KPMG, and EY, will separate their audit practices by June 2024, marking the largest change in the audit sector globally, Reuters reported.
The Financial Reporting Council (FRC) has laid down principals for the operational separation of the four audit units, aiming to improve audit quality.
The separation came following corporate failures builder Carillion and retailer BHS, which led to three government-backed reviews that recommend amending the auditing system.
The FRC's principles required that the firms' payment to auditors should not exceed the profits of the audit practice, and an independent audit board should oversee the practice.
"The objectives of operational separation, which is world-leading, are to ensure that audit practices are focused above all on delivery of high-quality audits in the public interest and do not rely on persistent cross-subsidy from the rest of the firm," the FRC said on Monday.
The Big Four should submit a plan to implement the principles to the FRC by 23 October, and the FRC will then agree on a transition timetable with each firm.