It is clear from today's FT at that the big four accountants fear collapse to the extent that they are discussing contingency plans. The discussions centre on how to re-boot a new company as a phoenix from the ashes of the old.
As the demise of Arthur Andersen illustrates, any sign of 'rotten' sends clients running elsewhere - what is the value of an audit certificate from a malodorous firm? The suggestion from John Griffith-Jones of KPMG, that 'regulators might need to compel clients to stay with a stricken auditor temporarily', is therefore particularly striking.
But the discussion should not just be about whether and how a big audit firm can rise like a phoenix from its own ashes. It should include whether audit as we know it would survive as a business after the destruction of a Big 4 audit firm. That one has been filed under "Too Difficult".
Update: See also Lex on 24 February 2011
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