KPMG stops consultancy for audit shoppers (News)

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Reuters

Accountancy agency KPMG has mentioned it can not do consultancy work for the UK’s largest firms if additionally it is auditing them.

In a memo the agency’s chairman mentioned the transfer was to “take away even the notion of a potential battle” of curiosity.

The “huge 4” accountancy companies are beneath scrutiny following the collapse of building agency Carillion.

The business watchdog is at the moment banning them from doing each auditing and non-audit work.

Earlier this yr the Monetary Reporting Council (FRC) mentioned the auditing work of the “huge 4” companies – Deloitte, KPMG, E&Y and PwC – had deteriorated.

It mentioned KMPG’s audits particularly had proven “an unacceptable deterioration”.

Within the leaked memo to companions from KPMG chairman Invoice Michael, he mentioned the agency was “working in the direction of” stopping non-audit work for FTSE 350 shoppers if it was additionally auditing them.

He mentioned there continued to be a “important commentary across the extent to which the supply by the auditor of non-audit companies to listed firms creates a battle of curiosity or notion of such”.

“Nevertheless, to take away even the notion of a potential battle, we’re at the moment working in the direction of discontinuing the supply of non-audit companies (aside from these carefully associated to the audit) to the FTSE 350 firms we audit.”

‘Erosion of belief’

KPMG audits 90 FTSE 350 firms and is the primary of the “huge 4” auditing companies to say it can cease doing non-audit companies for firms it audits.

“The roots of our occupation lie in a elementary want for belief, assurance and confidence within the capital markets,” mentioned Mr Michael.

“The latest erosion of belief in our occupation can be our downside to repair and I’m decided that we take the proper plan of action to repair it.”

Auditors overview the accounts of companies to see if the figures are a real and truthful reflection of firms’ monetary well being.

However the accounting business has confronted loads of criticism in the previous couple of years over whether or not their verdicts on firms’ accounts might be trusted.

Other than the collapse of Carillion and the demise of BHS, a sequence of accounting scandals have focussed regulatory consideration on the sector.

Final month, the FRC mentioned its overview of the audit business would “embrace figuring out whether or not additional actions are wanted to forestall auditor independence being compromised, together with whether or not all consulting work for our bodies they audit must be banned”.

The Competitors and Markets Authority (CMA) has additionally mentioned it might probe whether or not the sector is “aggressive and resilient sufficient to take care of top quality requirements”.

There have additionally been calls for from some quarters for the auditing business to be damaged up.

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