The merger of Moore Stephens International Ltd., a global accountancy and advisory network, and Binder Dijker Otte (BDO), a renowned Belgian accounting company, would reportedly be creating a major competitor for big auditors.
Reports cite, this turn of events does not bode well for the big four industry players of PwC, Deloitte, KPMG, and Ernst & Young who would be challenged by this new competitor amid rapidly increasing scrutiny.
According to a report by Financial Times, the new entity would be taking over Grant Thornton’s position of being the fifth-largest accounting company (by revenue) in the UK, boosting staff and partner numbers by about a quarter to reach approximately 264 & 5,000 respectively. Moreover, the merger would also be strengthening the expertise of the new firm in a plethora of lucrative areas such as insurance, financial services, public sector clients and shipping.
The news of the purported merger comes at a crucial moment for the industry, which has come under extreme scrutiny inside the parliament following a string of scandals at firms such as Patisserie Valerie, BHS & Carillion. An extensive review of the auditing industry of Britain has been called by the government.
The big four auditors have been fined several times after their working practices were criticized. The Financial Reporting Council, tasked with monitoring the auditing industry, fined PwC £6.5 million earlier this year over the firm’s auditing of department store-chain, BHS.
The merger between BDO & Moore Stephens has reportedly received approvals from equity partners of both the firms. BDO, which employs over 74,000 individuals across the world with 3,500 of them being in Britain, reported UK revenues to the tune of about £456 million in 2017. Moore Stephens, with its 2,000 employees, has revenues of £181 million.
Reportedly, discussions between the two parties are understood to be advanced. However, it is not yet clear whether both parties would be ready and make a formal announcement over the course of this week.