All of the Big 4 work this way. They're legally organised as "networks" to which the name is licensed to independent legal entities in each country or jurisdiction by a small headquarters entity. However while this legal fiction helps them in the court room, the facts on the ground seem otherwise, a senior executive in Berlin will find that "miraculously" the completely different legal entity in Singapore has a job opening that exactly matches their CV when they want to work in Singapore for a few years.

It is reasonable to assume that most of the problems with the audit firms are endemic both within a network and likely across the networks. What they're doing is very close to useless, they're not very good at it, and yet they reap enormous fortunes from doing so.

Governments are now scared to do anything about it - even just digging into some of the obvious problems, because "Scandal at audit firm" is how we ended up with a Big 4 instead of a Big 5. Arthur Anderson was destroyed by what was uncovered when Enron blew up.

I believe the right fix should be inspired by the Paris MOU, the mechanism by which European ports instituted Port State Control as opposed to Flag State Control.

Under the Paris MOU, Flag States remain responsible in principle for proper oversight over the ships flying their flag. But the European ports inspect some of them to see if that oversight has been effective, and if they're non-conforming they are detained until the problem is rectified.

The inspections result in data, and the data is analysed and then - this is the clever bit - that analysis informs future inspections. If the inspections of vessels flying flag A mostly came up with nothing, flag A gets whitelisted and next cycle few inspections occur for flag A. On the other hand if the inspections for flag B keep finding problems, flag B gets blacklisted and next cycle more inspections occur for flag B. This is repeated forever.

https://www.parismou.org/detentions-banning/white-grey-and-b...

For a ship owner, inspections are annoying and cost money but on the other hand some registers, especially "Open Registers" (aka "Flags of convenience") may be cheaper (and their lax standards might let you avoid doing maintenance other registers would have required). The Paris MOU's rules mean that if you pick a notoriously bad flag because it was cheaper or easier for you, you're going to spend a lot of time sat in port not making any money, either detained or being inspected. So, even if you choose a cheap flag you'll look for one that isn't blacklisted. This has the effect of raising standards without costing lots of money for the Paris MOU's members to inspect everything constantly.

I think countries should hire their own relatively smaller team of auditors, and re-audit some of the companies that get audited, and then not only act on the result of the re-audit (e.g. fining or winding up businesses where the government's auditors found problems, fining audit firms that missed obvious problems) but also analysing the results of the audits to put audit firms (including but not limited to the Big Four) into white/ black lists and re-audit more or less of their future work accordingly. The incentive becomes: Pick an audit firm (Big Four or otherwise) that is whitelisted, so that you're less likely to get re-audited.