The Financial Reporting Council, the U.K.’s audit watchdog, is calling, is calling, is calling out Deloitte’s name in a probe of the Green Dots’ 2015 and 2016 audits of building products distributor SIG, according to several publications across the pond.
From the Financial Times:
SIG said in February it had discovered misstatements after a whistleblowing allegation about irregularities at its core UK business.
The errors meant SIG’s full-year profits for 2016 were overstated by £3.7m, with a further £2.5m overstatement in the first half of 2017 and £400,000 overstatements related to previous years.
The investigation will focus on the audit of cash and supplier rebates, both Accountancy Age and Reuters reported.
Deloitte said in a statement that it would “co-operate fully” with the investigation, according to the Financial Times.
The statement goes on to say:
“Quality is integral to our audit work and we are committed to continued improvement in audit quality through investments we’ve been making and programmes we have in place.”
SIG initially said it intended to restate its previous accounts working closely with Deloitte, but 78% of SIG investors voted against the reappointment of Deloitte as the company’s auditor in May, according to Accountancy Age.
The discovery of accounting irregularities led to several SIG staff members being suspended.
All the Big 4 firms in the United Kingdom, most notably KPMG, have been under fire by the FRC for their decline in audit quality. The audit regulator singled out KPMG a couple weeks ago for its poor audit work, calling it “unacceptable,” after an FRC review of 16 audits carried out on firms in the Financial Times Stock Exchange 350 index revealed that half of KPMG’s audits required some or significant improvement.
Image: Wikimedia Commons/Rayhonso
Why do we let corporations pick their auditors? Why do we have only four big firms instead of a dozen, a score or more? Why doesn’t government do the audits, as the IRS does tax audits? Why is law enforcement handcuffed by inadequate budgets and rules that hinder investigations? Why are auditors allowed to quietly resign instead of being required to blow the whistle? Auditing needs a shakeup, fundamental restructuring and the accounting firms need a serious debate about their failings, practical and moral. [