The auditing work of one of the world’s “Big Four” accounting firms has been sharply criticised by the industry’s watchdog.
KPMG had shown an “unacceptable deterioration” and will be subject to closer supervision, the Financial Reporting Council said.
The FRC added all the Big Four – which also include PwC, EY and Deloitte – needed to reverse a decline.
However, KPMG was singled out for the poor quality of its work, the FRC said.
Every year the watchdog reviews the audits of Britain’s biggest companies to ensure they are up to scratch.
“There has been an unacceptable deterioration in quality at one firm, KPMG,” the FRC said. “50% of KPMG’s FTSE 350 audits required more than just limited improvements, compared to 35% in the previous year.”
Stephen Haddrill, head of the FRC, said: “At a time when public trust in business and in audit is in the spotlight, the Big Four must improve the quality of their audits and do so quickly.
“They must address urgently several factors that are vital to audit, including the level of challenge and scepticism by auditors, in particular in their bank audits. We also expect improvements in group audits and in the audit of pension balances.”
He said firms “must strenuously renew” their efforts to improve audit quality to meet the legitimate expectation of investors and other stakeholders.
Let’s block ads! (Why?)