Allen & Overy's consultancy arm is advising on an assessment of KPMG's audit practice by industry regulator the Financial Reporting Council, amid increased scrutiny of the Big Four accountancy giants.

The Magic Circle firm's regulatory consulting business is advising the FRC with a team led by Sally Dewar – a former corporate finance accountant at KPMG. She joined A&O as head of the firm's consulting and regulatory advisory practice when it launched the arm last year.

Commenting on the mandate, Dewar, who is CEO of A&O Consulting, said: "We're seeing increased demand for advisers with in-depth legal and technical insight, together with the ability to deliver tailored business outcomes. The scope and scale of our offering enables us to do this and is proving to be a successful combination."

The FRC's assessment comes as sweeping changes are expected in the sector.

The Big Four – EY, KPMG, Deloitte and PWC – are under scrutiny following a slew of accounting scandals at listed companies such as Carillion.

A major report into the audit sector by the Business, Energy and Industrial Strategy (BEIS) Select Committee was published today (April 2).

In the report into the "future of audit", the BEIS recommends that the Competition and Markets Authority should break up the Big Four's audit and non-audit arms, saying that "the benefits of separation are large, and in our judgement, worth incurring significant costs".

A spokesperson for KPMG said in a statement that the BEIS report "shows that trust in audit is in urgent need of repair", adding: "We have been open about the need for change and we want to play a leading role in building a strong, sustainable and trusted audit sector for the future."

The firm added that audit quality is "the number one priority for our firm".

Separately, a government review by Sir John Kingman late last year proposed that the FRC is replaced with a new regulator that has new powers.

Last year, Freshfields Bruckhaus Deringer, Linklaters and Hogan Lovells were drafted in to advise the Big Four on a review into their practices by the CMA, which was set to judge whether the market-leading auditors are "too big to fail".