By Richard Collings BBC World Business Report

The collapse of energy giant Enron and the problems at WorldCom have placed the accountancy profession under the spotlight as never before.

Both companies were revealed to have exaggerated their profits and hidden the extent of their debts and their auditor, Arthur Andersen, failed to expose the practice and has paid the price.

Now the remaining members of accountancy's so-called Big Four - KPMG, PricewaterhouseCoopers, Ernst & Young and Deloitte & Touche - are coming under pressure to answer allegations they operate an effective closed shop.

It has also been suggested their performance as auditors is compromised by their enthusiasm for lucrative consulting contracts.

Big Four

There's a new buzz-word doing the rounds in the financial community - low-balling.

If the large firms are themselves auditing all the large listed companies then it is not surprising every time there is a problem it is one of those firms that's involved

Peter Wyman, UK Institute of Chartered Accountants

Low-balling describes a practice which many commentators insist is becoming increasingly common in the accountancy profession.

According to some observers, the Big Four have deliberately lowered their prices in order to keep smaller, middle ranking accountancy firms out of the audit market.

The criticism is that smaller firms have been denied access to the more lucrative large scale consultancy roles.

Denials

Gavin Hinks, editor of the industry journal Accountancy Age, said the profession as a whole would argue that they haven't been low-balling, that they have been charging reasonable prices.

"That's ironic given that recently one of the responses of the profession to proposed new legislation and regulation is that audit fees will have to jump enormously to cover their extra cost, which seems to suggest that they haven't been really putting the effort into the work that they perhaps could have done," he said.

Peter Wyman, chairman of the UK's Institute of Chartered Accountants and a senior partner at PricewaterhouseCoopers said only the top four companies are capable of doing this work.

He said mid-size firms can't carry out the work because of the investment needed to be able to audit on a global basis.

"If the large firms are themselves auditing all the large listed companies then it is not surprising every time there is a problem it is one of those firms that's involved," he said.

Ongoing investigations

Since the recent accounting scandals broke, there have been calls for all auditing work to be distributed more widely - a sharp contrast to the current situation, where major contracts are monopolised by the elite.

The whole suggestion that somehow the audit is the loss-leader to get lucrative consulting work is completely unproven

Peter Wyman

This is despite the fact that some of the Big Four are currently being scrutinised by the US Securities & Exchange Commission for alleged irregularities.

Britain's financial watchdog, the FSA, the dominance of the four firms is worthy of the attention of the competition authorities.

Peter Wyman dismisses suggestions that audit work can be influenced by the prospect of lucrative consultancy contracts.

"The whole suggestion that somehow the audit is the loss-leader to get lucrative consulting work is completely unproven," he said.

"We've looked very carefully at the independent reports of audit failure and in not one single case is there any connection between consulting work or any other non-audit work and some alleged cause of failure," he added.

"So the whole notion that somehow audit quality is effected by doing consulting work is completely without foundation."

But however the accountancy profession fights its corner, it's clear that investors are likely to remain suspicious.