Experimental feature

Listen to this article

00:00
00:00
Experimental feature
or

This article is from today’s FT Opinion email. Sign up to receive a daily digest of the big issues straight to your inbox.

Last week, the head of the UK’s accounting watchdog said the time had come to consider breaking up the Big Four accountancy firms — Deloitte, EY, KPMG and PwC. Is the Financial Reporting Council right? Is it time to force the Big Four to lop off their highly lucrative consulting arms?

In our latest FT Opinion Head to Head, Natasha Landell-Mills argues that the FRC is correct. Recent market failures, notably the collapse of outsourcer Carillion, show that conflicts of interest are inevitable when audit firms are also selling other services, which are often more profitable, to management teams.

Accounting scandals are certainly cause for concern, counters Jim Peterson, but forcing the Big Four to divest their non-audit businesses would not be an appropriate remedy. On the contrary, he writes, it would weaken them financially and circumscribe their ability to meet the needs of clients. It is a solution in search of a problem.

As part of an initiative to highlight our readers’ opinions, we are extending this debate to you. Should the Big Four auditing firms be required to divest their consulting businesses? Send your opinion (maximum 250 words) to ask@ft.com by Sunday March 25. We will publish a selection of the best on ft.com next week.

Data rush: A neglected question raised by the Cambridge Analytica/Facebook data harvesting scandal is what kind of company CA is exactly. Cambridge Analytica, John Gapper writes, is a resonant name for what is essentially an advertising agency. One of the morals of this tale, John argues, is to beware executives with cut-glass accents and good suits.

The oldest hatred: Fascists may no longer rail against “rootless cosmopolitans”, but populist animus directed at “globalists” is a reminder, argues Edward Luce, that anti-Semitism is making an unwelcome comeback. Its return is particularly striking, Edward suggests, in Britain and the US, where it has been enabled, if not actively stoked, by the rhetoric of Donald Trump.

Soft soap: Much has been made of the liberalisation under way in Saudi Arabia. But, writes Roula Khalaf, the Kingdom’s new-found taste for entertainment has its limits. A Turkish soap opera popular with viewers in Saudi Arabia is the latest victim of deepening tensions between Riyadh and Istanbul.

Best of the rest

The Cambridge Analytica saga is a scandal of Facebook’s own making — John Harris in The Guardian

The new military-industrial complex of big data psy-ops — Tamsin Shaw in the New York Review of Books

Wisconsin is trying to segregate higher education into the haves and have-nots — Paula Krebs in The Washington Post

The French must stop putting barriers in the way of the native tongues of so-called francophone countries — Véronique Tadjo in Le Monde (in French)

The Tories just don’t get it — Alex Massie in The Spectator

What you’ve been saying

We fear a powder keg is about to ignite in Congo — letter from Bernard Kateta Balinuno

The current stalemate over elections, coupled with the economic downturn, has angered people, who have gone on demonstrations across the country. The Catholic Church has asked its faithful to come out in peaceful protests; and they have been joined by many other Christian denominations, and Muslims. All the efforts of the Catholic Church have put it in danger, but despite this, it has maintained its pastoral message of calling for fair and just elections in 2018, and standing by the peaceful protests of the people. Today we fear that a powder keg, greater than at any other time in Congo, is about to ignite a resurgence of fear, anger and insecurity, as our people face an uncertain 2018. The Church is doing all that it can, but if the international community doesn’t react quickly, it will be too late.

Comment from RunningScared on BlackRock bets on algorithms to beat the fund managers

I’ve been wrestling with this question as a fund analyst and fund manager for nearly two decades and still believe a well-resourced and experienced stock picker can beat the market. That said, one of our most successful investments has been a rules-based, quant strategy with a sensible fee that has smashed the MSCI Europe over all timeframes. It is interesting to note that this same strategy is applied to US and Global funds, which perform poorly. Rules-based is not always the answer.

Warmth and weight gain: what every farmer knows — letter from Bill Bailey

The scientific reality is that, being mammals and warm-blooded, nature intends that some 70 per cent of our calorie intake should be used to generate heat — whereas comparable cold-blooded creatures would need about one-fifth of our calorie consumption. Exercise is very healthy but (professional athletes apart) not a great consumer of energy. The reality — as every farmer knows — is that weight gain increases in warm accommodation. In short, modern obesity derives from the introduction of universal central heating, heated cars, and heated workplaces. It is ironic that the statutory rules for heating of workplaces etc imposed by zealous governments have contributed to the problem. Turning down the thermostats and wearing more clothing will not only cut obesity but save the planet!

Today’s opinion

EM Squared: Investors wary of Saudi reform
Greenfield investment has fallen as western investors await outcome of MbS’s policies

Anti-Semitism in the age of Donald Trump
The west’s largest taboo is creeping back from the fringes, most remarkably in the US and UK

Instant Insight: Three cheers for the European Commission’s tax on tech
Reining in big digital players will deprive populists of a powerful weapon

Saudi Arabia’s rift with Turkey turns to soap opera
Arabs’ love affair with Turkish dramas has been thwarted by political conflict

Free Lunch: Tories approach their Brexit cliff edge
The time is approaching to confront the party’s own contradictions

FT Alphaville: Well that’s one reason to buy yen . . .

Cambridge Analytica exploited Facebook data with style
Its chief made the most of a social media titan’s flaws and a university’s research

EM Squared: Emerging market equity funds make record start to year
Active fund managers grab half of inflows as ETFs lose their iron grip

Head to Head: Should the Big Four accountancy firms be split up?
Two experts debate how best to reform auditing

FT View

FT View: Digital privacy rights require data ownership
Consumers needs incentives to assert control over what is theirs

FT View: Britain’s economy still needs a healthy pay rise
A modest increase in UK earnings growth does not equal normality

The Big Read

The Big Read: Egypt: Sisi tightens grip on power ahead of ‘sham’ election
General-turned-president has stabilised country but critics warn of growing oppression and the rising role of the military

Copyright The Financial Times Limited 2018. All rights reserved.