The FRC said the most common issues were in relation to revenue, impairment of assets, and group audit oversight.įive of the nine BDO audits and three of seven at Mazars needed more than limited improvements, the FRC said.
"It has become an exercise in compliance checking and the public admonishment of auditors, and it does little to improve audit quality, foster innovation or encourage new entrants into the audit market," the ICAEW said in a statement.
The ICAEW, a professional accounting body based in London, said the FRC audit check "has lost its way". The FRC said improvement measures were also expected at so-called challenger accountants BDO, which is headquartered in Belgium, and Mazars, which is based in France.ĭeloitte, EY, Grant Thornton and PwC improved overall, with about 80% or more of audits requiring only limited changes, but the FRC said this score still fell short of its expectations.ĮY said it was able to maintain audit quality standards despite challenges from the COVID-19 pandemic, but recognised it had more to do.
KPMG is also facing a hefty fine from the FRC for its auditing of Carillion.īritain's business ministry said the FRC report underscores the need to reform the audit sector, which is already underway.ĭecisions have not yet been taken on when the government will publish a response to its consultation, or in exactly what form, a ministry spokesperson said. "We are confident that the steps we have taken to date will result in improvements in future banking audit inspections." "Whilst we know we have more to do to improve the inspection outcomes, our banking audits are robust and the findings do not call into question our audit opinions," Cath Burnet, KPMG UK's head of audit, said. KPMG UK, whose major banking clients include Barclays (BARC.L), said the company was committed to delivering high-quality audits and was already working hard to make the necessary changes the FRC had highlighted. "KPMG has agreed additional improvement activities to be delivered this year over and above its existing audit quality improvement plan," said the watchdog, which did not disclose which specific company audits it had checked. "Inspection results at KPMG did not improve and it is unacceptable that, for the third year running, the FRC found improvements were required to KPMG's audits of banks and similar entities," the FRC said in a statement. The results pile more pressure on the government to propose legislation to change corporate governance and the audit market after its consultation on recommendations in three government-backed reviews following the collapse of British retailer BHS and building firm Carillion. The Financial Reporting Council (FRC) said checks of 103 audits by KPMG, PwC, Deloitte, EY, Mazars, Grant Thornton and BDO from 20 showed nearly a third required improvement, only a marginally better outcome than in its previous annual survey. LONDON, July 23 (Reuters) - KPMG's bank audits needed improvements for an "unacceptable" third year running and the accounting firm will be closely monitored, Britain's auditing watchdog said on Friday in an unusually blunt assessment of leading accountants.