The world’s audit industry is concentrated in the hands of four big accounting firms: PricewaterhouseCoopers, KPMG, Ernst & Young, and Deloitte Touche Tohmatsu (the Big 4). These firms are in a strong position in that they audit the financial statements of nearly all the global public companies in the world and, arguably, are the only audit firms able to do so. They are huge, privately-owned, international networks with robust revenues, vast resources, and expertise. The firms have two major burdens. They are heavily regulated by governments, and they are vulnerable to massive lawsuits when investors and creditors suffer large losses due to fraud or error. Since the dual shocks of the collapse of Arthur Andersen (reducing the Big 5 to 4) and the enactment of stringent regulations by the U.S. Congress in 2002 in reaction to corporate accounting scandals, there is great concern in the financial community that another of these companies could be forced out of business, further reducing the choice of auditors for multinational corporations and causing disruptions in the marketplace. First, this paper briefly reviews the regulation of audit firms and their exposure to massive lawsuits. Then it takes a fresh look at various proposals intended to avert loss of another major audit firm, to reduce concentration and to stimulate greater competition in the audit industry. Until smaller competitors or new competitors can build viable networks and reputations for high quality audits, global public companies will continue to face a limited choice of auditors. The paper suggests that it would be appropriate for the U.S. Congress to include consideration of the Big 4 audit firms in its review of regulation of banks and other financial institutions, particularly those regarded as “too big to fail.” The paper proposes that, if the Congress were to consider limiting the liability of audit firms, no such relief should be granted without setting conditions that are likely to make the auditing of public companies more competitive. One way to do this would be to set incentives for voluntary structured divestitures as a means of reducing heavy concentration in the audit industry in an orderly manner. This could serve as a starting point for determining how the open season for divestiture would operate and how to deal with the inevitable questions and issues as they arise during the legislative process