KPMG stops consultancy for audit clients
Accountancy company KPMG has stated it’ll now not do consultancy paintings for the United Kingdom’s largest firms if it is usually auditing them.
The company’s chairman stated the transfer was once to “remove even the perception of a possible conflict” of pastime.
The “big four” accountancy corporations are underneath scrutiny following the cave in of building company Carillion.
The trade watchdog is these days taking a look at banning them from doing each auditing and non-audit paintings.
Earlier this yr, the Financial Reporting Council (FRC) stated the auditing paintings of the “big four” corporations – Deloitte, KPMG, E&Y and PwC – had deteriorated.
It stated KMPG’s audits specifically had proven “an unacceptable deterioration”.
In a leaked memo to companions from KPMG chairman Bill Michael, he stated the corporate was once “working towards” preventing non-audit paintings for FTSE 350 clients if it was once additionally auditing them.
He stated there persisted to be a “significant commentary around the extent to which the provision by the auditor of non-audit services to listed companies creates a conflict of interest or perception of such”.
“However, to remove even the perception of a possible conflict, we are currently working towards discontinuing the provision of non-audit services (other than those closely related to the audit) to the FTSE 350 companies we audit.”
The Competition and Markets Authority (CMA) has additionally introduced a probe into whether or not the audit sector is “competitive and resilient enough to maintain high quality standards”.
Deloitte has shared its reaction to the CMA’s investigation, together with its personal set of treatment proposals. These come with “a ban on non-audit services provided to FTSE350 and large unlisted public interest entity audit clients”.
Deloitte additionally suggests a cap on marketplace proportion for portions of the marketplace, and a more potent governance construction.
PwC stated it was once “open to embracing change” and recognised that additional strikes to restrict non-audit services and products to audit clients “could be necessary”.
The fourth of the massive accountancy corporations, EY, declined to remark.
‘Erosion of accept as true with’
KPMG audits 90 FTSE 350 firms and is the primary of the “big four” auditing corporations to mention it’ll forestall doing non-audit services and products for firms it audits.
“The roots of our profession lie in a fundamental need for trust, assurance and confidence in the capital markets,” stated Mr Michael.
“The recent erosion of trust in our profession is also our problem to fix and I am determined that we take the right course of action to fix it.”
Auditors assessment the accounts of corporations to peer if the figures are a real and truthful mirrored image of businesses’ monetary well being.
But the accounting trade has confronted a large number of grievance in the previous couple of years over whether or not their verdicts on firms’ accounts will also be depended on.
Apart from the cave in of Carillion and the death of BHS, a sequence of accounting scandals have centered regulatory consideration at the sector.
Last month, the FRC stated its assessment of the audit trade would “include determining whether further actions are needed to prevent auditor independence being compromised, including whether all consulting work for bodies they audit should be banned”.
There have additionally been calls for from some quarters for the auditing trade to be damaged up.