The big four accountancy firms have been told by watchdogs to accelerate the ring-fencing of their audit businesses by bolstering independent governance and improving financial transparency.

Sky News has learnt that the Financial Reporting Council (FRC) wrote to the quartet – Deloitte, EY, KPMG and PricewaterhouseCoopers (PwC) – this week to set out details of the ‘operational separation’ blueprint that it hopes will improve audit quality following a string of corporate scandals.

In the letter, the FRC is understood to have told the four firms, which collectively have a dominant share of the market for auditing major listed UK companies, that they must create separate boards for their audit practices with an independent chairman.

The chair could not be a partner at the firm, although further details of the criteria to determine independence have yet to be finalised.

The big four will also be required to have a majority of independent directors on their audit boards,…

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Regulator tells big four auditors to accelerate break-up plan | Business News
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