KPMG's audit quality 'unacceptable,' UK regulator says

Tuesday, June 19 2018

KPMG's audit quality 'unacceptable,' UK regulator says

KPMG's audit quality 'unacceptable,' UK regulator says Published 8 Logo of KPMG, a professional service company, is seen at the company's head offices at La Defense business and financial district in Courbevoie near Paris May 16, 2018. — Reuters pic
LONDON, June 19 — KPMG’s audit work in the UK is of an unacceptable standard and the firm will face increased scrutiny, Britain’s accounting regulator said.
Auditors at KPMG don’t challenge management enough, aren’t sufficiently skeptical and are inconsistent in their execution of audits, according to the report by the Financial Reporting Council. The decline in quality over the last five years “is unacceptable and reflects badly” on efforts by previous leadership to improve the work, the watchdog said.
UK auditors are facing increased scrutiny as lawmakers renew calls for competition authorities to consider a breakup of the so-called “Big Four” accountancy firms. A parliamentary report last month criticised KPMG, Deloitte, EY and PwC, along with banks and other advisers, for poor oversight of Carillion Plc, a collapsed British firm that constructed and managed government projects.
A review of 16 audits carried out on firms in the FTSE 350 index by the FRC found that half required some or significant improvement. To address the poor performance, the regulator will increase the number of KPMG audits it inspects in the current financial year by 25 per cent. The accountancy firm has established a board sub-committee to oversee audit quality to try to improve, according to the report yesterday.
A message left with KPMG wasn’t immediately returned. — Bloomberg Related Articles