The UK's competition regulator has recommended a major shake-up of the UK's accountancy market.
But it has stopped short of calling for the Big Four accountancy firms to be broken up.
The Competition and Markets Authority (CMA) said auditing and consultancy services should be entirely separate.
However, industry bodies criticised the proposals, with one saying there was no evidence that they would lead to better audits.
The CMA's recommendations follow the collapse of high-profile companies such as construction firm Carillion, which was audited by KPMG.
CMA chairman Andrew Tyrie said: "People's livelihoods, savings and pensions all depend on the auditors' job being done to a high standard.
"But too many fall short - more than a quarter of big company audits are considered sub-standard by the regulator. This cannot be allowed to continue."
Its three main recommendations are:
- A split between audit and advisory businesses, with separate management and accounts
- A mandatory "joint audit" system, with a Big Four and a non-Big Four firm working together on an audit
- Regulation of those appointing auditors
In 2016-17, the Big Four accountancy firms - Deloitte, EY, PwC and KPMG - accounted for 97% of FTSE 350 audits and 99% of FTSE 100 audits.
The Financial Reporting Council (FRC), which regulates the accountancy sector, has also been under review and plans have been put forward to toughen up the regulation of major audit firms.
The report, headed by Legal & General chairman Sir John Kingman, recommended that the FRC should be replaced by a new Audit, Reporting and Governance Authority.
And earlier this month, MPs called for the Big Four accountancy firms to be broken up.
Rachel Reeves, chair of the Commons Business, Energy and Industrial Strategy Committee, said: "We welcome the CMA's recommendations aimed at addressing what are serious failings in the audit market and ending the stranglehold of the Big Four.
"We agree that it is high time that their audit work is separated out from their consultancy services to tackle the conflicts of interest that have persisted for too long."
Business body the CBI said that improving the quality of audits must be "paramount", but warned that some of the CMA proposals risked "damaging" the UK's reputation.
"Mandating joint audits will add cost and complexity for business with no guarantee of better outcomes," said CBI president John Allan.
"Operational splits could restrict access to the skills required to carry out complex audits," he added.
PwC said in a statement: "It's important that the potential impact and implementation of recommendations are well thought through to ensure they deliver the desired outcomes and avoid any unintended consequences."
Marcus Scott, chief operating officer of finance sector industry body TheCityUK, said: "Radical solutions imposing operational splits on the big audit firms may make for good headlines, but they are poorly focused, with no evidence that they will lead to genuinely enhanced audits.
"Change should be embarked upon with care, conscious of the risks of unintended consequences and with an eye to maintaining the huge value these firms provide.
"As such, reform should focus on quality, transparency and accountability - three vital areas that will bring benefits for audited companies, investors and lenders."