How a Sleeper Issue Inside the Big Four Accounting Giants Could Topple the Economy

ABC Investigations' Adele Ferguson looks at the business of financial auditing, which is a significant part of the big four accounting firms' practices, and concerns over declining standards and conflicts of interest.

The big four accounting firms — Deloitte, PwC, EY and KPMG — dominate Australia's financial auditing landscape. They audit the accounts of the country's largest companies, providing the assurance that investors, regulators, and the public rely on to trust the financial system.

But Adele Ferguson's investigation for ABC 7.30, broadcast in August 2023, revealed serious concerns about the quality and independence of that auditing work. Former partners and regulators described a culture in which the commercial interests of the firms — their consulting and advisory revenues — were creating conflicts of interest that compromised the integrity of their audit work.

The investigation drew on interviews with former partners, academic experts, and regulators who had long been concerned about the concentration of auditing power in the hands of four firms — and the inadequacy of the oversight mechanisms designed to ensure their independence.

The concerns were not merely theoretical. Several high-profile corporate collapses in Australia and internationally had raised questions about whether auditors had adequately scrutinised the companies they were supposed to be independently assessing.

Ferguson's reporting contributed to growing pressure on the government and regulators to strengthen the oversight of the auditing profession — and to examine whether the big four's dominance of both auditing and consulting was creating systemic risks for the financial system.