• Follow us

Economy

UK audit giants 'should be broken up'

The UK's Big Four accountancy firms should be separated into audit and non-audit businesses, says an influential committee of MPs.

Deloitte, EY, KPMG and PwC conduct 97% of big companies' audits while also providing them with other services.

They are under review by the Competition and Markets Authority (CMA), which has proposed an internal split between the two functions.

But now MPs are calling for a full structural break-up of the firms.

The CMA's review, released on 2 April, follows high-profile company collapses such as construction firm Carillion, which was audited by KPMG.

It comes on the same day that the Financial Reporting Council (FRC) announced it had opened an investigation into KPMG's audit of Carillion.

In December last year, the CMA put forward three main recommendations:

A split between audit and advisory businesses, with separate management and accounts More accountability for those appointing auditors, with the aim of strengthening their independence A "joint audit" system, with a Big Four and a non-Big Four firm working together on an audit

In a report, the Business, Energy and Industrial Strategy (BEIS) Committee endorsed the CMA's proposals, but said a full break-up of the Big Four would "prove more effective in tackling conflicts of interest".

Rachel Reeves, who chairs the committee, said: "For the big firms, audits seem too often to be the route to milking the cash-cow of consultancy business.

"The client relationship, and the conflicts of interest which abound, undermine the professional scepticism needed to deliver reliable, high-quality audits."

Ms Reeves said vested interests should not be allowed to get in the way of positive change, adding: "We must not wait for the next corporate collapse."

Focus on fraud

Among its other recommendations, the committee said there should be a pilot scheme of joint audits for the most complex cases, "to enable the challenger firms to step up".

It also called for more effort by auditors to tackle fraud at companies.

"In light of the failings at Patisserie Valerie, audits must state how they have investigated potential fraud, including by directors," the committee said.

Cafe chain Patisserie Valerie fell into administration in January. Its accounts were found to have been overstated by £94m, according to its administrators KPMG.

The former finance director of the chain, Chris Marsh, is under investigation by the Serious Fraud Office.

Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales (ICAEW),welcomed the report, saying that it made "many sensible suggestions" that would help achieve better choice in the market for audits.

However, he did not agree with MPs that the Big Four accountancy firms should be broken up.

"We are concerned that some of its ideas for reducing conflicts of interest, such as the break-up of the largest multi-disciplinary firms, might prove counter-productive," said Mr Izza.

"This could both drive out incumbents and discourage new entrants and it would be unfortunate if an attempt to guarantee the independence of audit firms ended up undermining the resilience of the audit market."

'Need for change'

KPMG said it was co-operating fully with the various inquiries under way into the audit system.

The FRC said it decided to open an enquiry into KPMG following matters the firm had self-reported.

The enquiry involves an assessment of the governance, controls and culture within KPMG's audit practice, the FRC said.

A KPMG spokesperson said the BEIS Committee's report showed that "trust in audit is in urgent need of repair", adding: "We have been open about the need for change and we want to play a leading role in building a strong, sustainable and trusted audit sector for the future."

Deloitte's UK managing partner for audit, Stephen Griggs, said: "We welcome many of the [BEIS Committee] recommendations, including extending the scope of the audit and better regulation of audit, but we have concerns about a potential structural split.

"This will be detrimental to audit quality and could materially damage the UK's competitive position as a leading capital market."

Read More



Leave A Comment

More News

BBC News - Business

'I will fight tooth and nail to make 2019-04-17 19:12:31Two women share their stories of juggling senior jobs and being home carers.

Will AI kill developing world growth? 2019-04-17 19:08:04Automation could wipe out many jobs in developing countries, says globalisation expert Ian Goldin.

JP Morgan: Is Wall Street's first female boss 2019-04-17 18:00:46JP Morgan promotes finance chief Marianne Lake, making her a possible successor to Jamie Dimon.

Ivanka Trump: I declined father's suggestion of World 2019-04-17 15:58:51She says her father suggested the role to her, but she told him she was happy in her work.

Climate change: Central banks warn of financial risks 2019-04-17 12:20:41The heads of two major central banks warn firms they may "fail to exist" if they ignore threats.

Jet Airways temporarily suspends all flights 2019-04-17 10:43:54The Indian airline suspends all of its domestic and international flights as it seeks further funding.

Netflix to trial showing top 10 lists to 2019-04-17 09:32:14Streaming company Netflix is to trial showing UK users its most-watched shows over a weekly period.

EU proposes tariffs on £15bn of US products 2019-04-17 08:04:42The EU makes it latest move in a long-running dispute with the US over aircraft subsidies.

Helium balloons blamed for UK train delays 2019-04-17 08:01:52Network Rail says helium balloons are causing delays by getting caught in overhead cables.

UK to introduce porn age-checks in July 2019-04-17 07:34:17Sites that fail to comply will face being blocked by internet service providers.

Juventus shares slump after Champions League defeat 2019-04-17 06:54:33Shares tumble after Juventus is knocked out of the Champions League by Dutch club Ajax Amsterdam.

House price growth at six-year low 2019-04-17 06:25:46House prices rise 0.6% in the year to February, the slowest rate since September 2012, official figures show.

Reuters: Business News

Carlos Ghosn to be indicted on additional charge New! 2019-04-19 04:55:36Tokyo prosecutors are likely to indict former Nissan Motor Co Ltd Chairman Carlos Ghosn on an additional charge of aggravated breach of trust as early

Foxconn says it remains committed to Wisconsin investment New! 2019-04-19 04:11:12Taiwan's Foxconn said on Friday it remains committed to its contract to build a display plant and tech research facilities in Wisconsin, days after t

Nissan slams output cut report as 'completely incorrect' New! 2019-04-19 03:23:49Nissan Motor Co Ltd said on Friday a report by the Nikkei that it would slash production this year was "completely incorrect" and that it had lodged

Despite headwind, Japan's Nomura says intent on going New! 2019-04-19 03:06:46Japan's Nomura Holdings has no plan to follow the lead of Wall Street rivals and seek a tie-up with a commercial lender, its chief executive told Reu

Qualcomm's joint venture with Chinese province to shut New! 2019-04-19 02:15:22A joint venture between U.S. smartphone chipmaker Qualcomm Inc and China's Guizhou province will shut down by the end of the month, The Information r

HNA denies embezzlement claims as it fights for New! 2019-04-18 23:47:57Embattled Chinese conglomerate HNA Group has denied accusations of embezzlement and financial irregularity made by a rival group of shareholders in Ho

Tesla's Elon Musk, SEC get another week to 2019-04-18 22:15:18Tesla Inc Chief Executive Elon Musk and the U.S. Securities and Exchange Commission will get another week to settle a dispute over Musk's use of Twit

Exclusive: New York Fed cracks down on Puerto 2019-04-18 22:13:09U.S. sanctions on Venezuela have led the New York Federal Reserve to crack down on Puerto Rico's $50 billion offshore banking industry, according to

National Enquirer to be sold to owner of 2019-04-18 22:11:16American Media Inc (AMI) said on Thursday it was selling its National Enquirer tabloid to James Cohen, whose family owns a magazine distributor and us

Oil prices inch up on signs of tighter 2019-04-18 21:51:08Oil futures edged up on Thursday as a drop in crude exports from OPEC's de facto leader, Saudi Arabia, and a draw in U.S. drilling rigs and oil inven

Uber's self-driving unit valued at $7.25 billion in 2019-04-18 21:49:23Uber's autonomous vehicle unit has raised $1 billion from a consortium of investors including SoftBank Group Corp, giving the company a much-needed f

Exclusive: Venezuela skirts U.S. sanctions by funneling oil 2019-04-18 21:25:06President Nicolas Maduro is funneling cashflow from Venezuelan oil sales through Russian state energy giant Rosneft as he seeks to evade U.S. sanction

Business News - UPI.com

Raytheon awarded $12.1M for AIM-9X tactical missiles for 2019-04-16 13:42:22 Raytheon has been awarded a $12.1 million contract for AIM-9X Sidewinder missiles for the U.S. Navy, U.S. Army and 21 allies.

Boeing awarded $65M in foreign military sales for 2019-04-16 13:22:56 Boeing has been awarded a 10-year $65 million contract to provide small-diameter bombs to 12 foreign nations, as well as others that have been approv

USS Ross tracked by Russian fleet after entering 2019-04-16 12:18:34 The USS Ross, an Arleigh Burke-class guided-missile destroyer, has been deployed to the Black Sea, where it will conduct security operations, as well

State Department approves new deal with Taiwan for 2019-04-16 10:31:36 The U.S. State Department has approved a $500 million possible foreign military sale contract renewal for training of Taiwanese F-16 pilots and maint

F-35As sent to U.A.E. for first Middle East 2019-04-16 08:50:09 The U.S. Air Force has deployed the F-35A Lightning II to the Middle East for the first time, with the aircraft landing at Al Dhafra Air Base in Unit

HII awarded $727.4M contract for Virginia-class sub materials 2019-04-15 13:03:32 General Dynamics has awarded Huntington Ingalls Industries a $727.4 million contract for procurement of long-lead-time materials for U.S. Navy's Vir

Boeing awarded $21.6M for GBU-57 'bunker buster' bombs 2019-04-15 12:12:24 Boeing was awarded a $21.6 million contract for sustainment of U.S. Air Force's GBU-57 Massive Ordnance Penetrator, known as a "bunker buster" bo

Keel laid for future USS Richard M. McCool 2019-04-15 12:08:01 The keel was laid for the future USS Richard M. McCool, Jr., an amphibious transport dock ship, at a ceremony at Huntington Ingalls Industries shipya

Boeing awarded $14B for upgrades to B-1, B-52 2019-04-15 09:14:41 Boeing has been awarded a $14.2 billion contract to modify, modernize and test weapons systems on B-1 and B-52 bombers for the U.S. Air Force.

Saab awarded $18M to supply Australian Army with 2019-04-12 11:48:38 Saab was awarded an $18 million contract supply the Australia's Army with its latest version of the portable bazooka-type weapons system.

GAO: Cost for president's new 23-helicopter fleet drops 2019-04-12 10:53:10 The cost to replace the U.S. president's aging helicopter fleet is about $234 million less since that originally budgeted in 2014, GAO says.

U.S. Defense officials lay out plans for Space 2019-04-12 10:04:35 Top Defense Department officials have detailed plans to develop the Space Force, recognizing "status quo is not sufficient" to confront adversarie

Christian Science Monitor |

Be Kind, Please Rewind: Oregon boasts last Blockbuster 2019-03-18 18:14:04All corporate-owned Blockbusters shuttered after the business belly-upped in 2010. The success of the last store of its kind in Oregon has thrive

Once a darling, Big Tech is now a 2019-03-18 18:14:04The push for regulating America’s largest tech firms is about more than Facebook. It’s about a world coming to terms with how information

Sign of hope or worry? When the dollar 2019-03-18 18:14:04Do dollar stores, which now outnumber McDonald’s restaurants, provide hope for low-income areas hungry for retail? Or is their arrival a symptom

Growth in 'gender-smart' investing helps women in business, 2019-03-18 18:14:04“Gender-smart” investing support a broad spectrum of initiatives that ultimately support progress for women and girls. The trend is likely

Behind Huawei’s court battle: open markets vs. national 2019-03-18 18:14:04This legal battle signals the rising strategic importance of internet security. The dawn of so-called 5G networks is raising the stakes, as the U.S. a

China to pass new law barring demands for 2019-03-18 18:14:04China is expected to pass a foreign investment law that will bar government authorities from demanding that overseas companies share technology s

GM shutters car production at Ohio plant 2019-03-18 18:14:04After more than 50 years of churning out cars and trucks, a changing consumer market is forcing General Motors to end vehicle production at its Lordst

Caregiving crisis? Employers slow to catch up to 2019-03-18 18:14:04Balancing work and family is a familiar challenge. We were intrigued by a new workplace survey that emphasizes the role that employers, not just gover

A Trump-Obama trend: revival of ‘Made in the 2019-03-18 18:14:04A US economic sector that many had written off has been showing strong new life. Our reporter looks at the trend’s durability and at the debate

Walmart phasing out greeters, workers with disabilities fear 2019-03-18 18:14:04In an effort to compete with Amazon, Walmart has turned its storefront "greeters" into more physically demanding "customer hosts," a move that cam

Stocks surge following US decision to postpone China 2019-03-18 18:14:04The US-China tech tug-of-war threatens to upend global trade. That's why the Trump administration's postponement of tariffs on Chinese imports signa

Beyond Amazon debacle, wider doubts about tax breaks 2019-03-18 18:14:04When New York City saw its deal for a corporate HQ collapse, some leftist politics was involved. But the bigger message may be rising scrutiny of whet

Home Page

LS polls: Mulayam, Mayawati share stage after decades, New! 2019-04-19 04:35:00Ending decades-long rivalry, SP patriarch Mulayam Singh Yadav and Mayawati Friday shared dais at an election rally with the BSP President describing t

Mukesh Ambani's debt-fueled bet on rising middle class New! 2019-04-19 04:31:00Asia's richest man has ambitions to take on Amazon.com Inc. and Walmart Inc. in India, where the power of the middle class is growing along with dema

Priyanka Chaturvedi quits as Cong spokesperson, likely to New! 2019-04-19 03:36:00Chaturvedi also changed the introduction in her Twitter account, where she had earlier clearly mentioned the posts she held in the party

LS polls: Major parties again fail to field New! 2019-04-19 03:14:00'Very few women are asked (to stand for elections),' said Santosh Ahlawat, the only woman MP from Rajasthan, and a member of BJP

Jet Airways saga: 2 grounded airlines in a New! 2019-04-19 03:04:00India's aviation sector is an investment conundrum: it's the world's fastest-growing aviation market that has seen 54 consecutive months of double-

Non-life insurance premium up 13% at Rs 1.7 New! 2019-04-19 02:35:00The 34 non-life insurers had a gross premium of Rs 1.51 trillion in 2017-18

Will take Rahul to UK court: Lalit Modi New! 2019-04-19 01:34:00Taking a dig at the PM and in an indirect reference to fugitive businessmen Nirav Modi and Lalit Modi, Rahul Gandhi said, 'I wonder why all chor (thi

India's online retail mkt to cross $170 bn New! 2019-04-19 01:00:00The online retail can potentially increase to around 37 per cent of the total organised retail market during this period

Teenager's online petition to save father's job at New! 2019-04-19 00:14:00In the petition titled 'Saving future of 16,000 Jet Airways employees', she has sought instant financial help for the airline from the government.

Jet Airways issues gag order, asks employees not New! 2019-04-18 23:56:00Jet said talking with external stakeholders especially the media might impact the bidding process for airline's stake sale.

TikTok fans are searching for proxies after Google, New! 2019-04-18 23:45:00TikTok, which is very popular among children, is facing criticism for circulation of "pornographic content".

India rice rates dip as demand slows, Bangladesh New! 2019-04-18 23:15:00The country's rice exports for April-February dropped 9.4 percent from a year earlier to 10.57 million tonnes, as leading buyer Bangladesh trimmed it

Business

The subtle ways that discrimination works New! 2019-04-19 20:00:00In the workplace, it’s a still man’s world

Publicis buys Epsilon, a data-marketer, for $4.4bn New! 2019-04-19 20:00:00The deal hints at advertisers’ virtual designs

Chevron buys Anadarko for its shale assets New! 2019-04-19 20:00:00The $33bn megadeal signals consolidation in the fracking business

India’s bankruptcy code collides with reality New! 2019-04-19 20:00:00A much-ballyhooed insolvency regime faces court challenges

Saudi Aramco looks downstream, and East New! 2019-04-19 20:00:00The oil giant’s shift towards Asia and beyond crude should worry its Western rivals

Big carmakers are placing vast bets on electric 2019-04-16 20:00:00From GM and Geely to Mitsubishi and Mercedes, giants of the industry are making battery-powered plans

Apple and Qualcomm settle a feud over patents 2019-04-16 20:00:00The agreement ends perhaps the most epic intellectual-property battle ever between technology titans

Do spring profits foreshadow an earnings winter? 2019-04-12 20:00:00Probably not

Amazon’s empire rests on its low-key approach to 2019-04-12 20:00:00Unflashy but high-powered machine learning powers everything from its fulfilment centres to the cloud

Lobbying in Donald Trump’s Washington 2019-04-12 20:00:00Advancing corporate America’s interests is no easier under the CEO president

Germany’s Mittelstand are hardly prepared for Brexit 2019-04-12 20:00:00Preparing for a hypothetical Brexit is too costly

Facebook dominates Afghan e-commerce 2019-04-12 20:00:00Recent changes to the social network’s newsfeed has made life harder for online retailers


Disclaimer and Notice:WorldProNews.com is not responsible of these news or any information published on this website.