Mazars prizes AIG audit from grasp of Big Four

26 February 2020 3 min. read

One of the world’s largest insurers has lined up an accounting firm from beyond the professional services world’s Big Four. Mazars stands to inherit the contract from PwC, less than a year after it did the same at banking giant Goldman Sachs’ UK wing.

The largest auditing and consulting firms of the UK have endured intense scrutiny in the last 24 months. Since the collapse of outsourcing giant Carillion, talk of ‘breaking up’ the Big Four has been steadily reaching a crescendo, and earlier in the spring, a Parliamentary report even endorsed the separation of the Big Four’s accounting and advisory wings.

In April 2019, this led the UK’s Competition and Markets Authority (CMA) to recommended a shake-up of the British audit market. While it stopped short of calling for a dreaded ‘break up’, it cited the need for legislation to address what it described as “serious competition problems.”

Mazars prizes AIG audit from grasp of Big Four

At the time, the CMA said, “More choice and competition for the audits of big businesses can and should drive up their quality, but the barriers to entry for ‘challenger’ audit firms are currently large,” asserted the watchdog at the time. "The CMA recommends mandatory joint audit, to increase the capacity of challengers, to increase choice in the market and thereby drive up audit quality. Challenger firms should work alongside the Big Four in these joint audits and should be jointly liable for the results.”

Just one month later, global financial services giant Goldman Sachs said its UK wing would look beyond them when appointing its new UK auditor. Either BDO or Mazars were understood to be in line to become the first auditor in the multinational investment bank and financial services company’s history from outside the Big Four, with Mazars ultimately winning out.

Less than a year later, the CMA has continued to work on proposed laws intended to end the stranglehold of Deloitte, PwC, KPMG and EY in the UK, and they are about to be put to the test for the first time – again by Mazars. According to The Financial Times, global insurance firm AIG has announced Mazars will take over from PwC as its UK auditor in 2021.

Citing people familiar with the matter, The Financial Times reported that Paris-headquartered Mazars – which is the UK’s 10th largest professional services firm – will serve as AIG’s auditor in the UK, in a role worth around £1 million. The contract will start next year, while PwC will retain its remit as AIG’s global group auditor, having held it since 1980. The Big Four firm earned around $53 million in audit fees in that time, with a further $20.6 million in audit-related fees for the global audit for year-end 2018.