That sound you hear? It’s KPMG leadership breathing a heavy sigh of relief for not being the name attached to audit failure headlines this week. Our lucky winner today is Deloitte. The Financial Reporting Council has fined Deloitte UK more than £900,000 (a cool $1,081,444 Federal Reserve notes) over its shoddy audit work for building […]
Exam cheating has been a hot topic in audit ever since EY got fined a record $100 million over the summer for cheating on ethics exams (ironically), and perhaps even before that when KPMG got caught using confidential information supplied to them by a PCAOB insider to improve the firm’s audit inspections years before. It […]
FT reports that Financial Reporting Council CEO Sir Jon Thompson has a strong message to firms upset about getting hit with fines for bad auditing: git gud. Accountants should stop complaining about extra scrutiny and fines for audit failures and improve the quality of their work, said the head of the sector’s UK watchdog, which […]
[UPDATE] The Queen’s KPMG was finally, officially fined £14.4 million by the Financial Reporting Council earlier this morning for all the stupidity that happened during the 2016 audit of collapsed construction and services company Carillion, as well as for the mistakes that occurred in its 2014 audit of IT software company Regenersis. KPMG UK and […]
Deloitte is doing a great job keeping the Financial Reporting Council happy these days. Per the FRC’s recently released 2022 Audit Quality Inspection and Supervision Report, the audit watchdog is pleased with the progress the firm has made and the absence of serious deficiencies: In the 2020/21 public report, we concluded that the firm had […]
Financial Times is reporting that across-the-pond regulators at the Financial Reporting Council have written a letter to CEOs at seven audit firms requesting details on how the firm prevents staff from cheating on professional exams. This comes after the SEC fined EY $100 million for cheating on CPE and CPA licensure ethics exams, KPMG’s dual […]
Let’s take a break from what’s going on right now in Ukraine to tell you something we’ve written a lot about in recent years and that we enjoy writing about: KPMG UK being bad at auditing. While we await KPMG’s punishment for that whole Carillion debacle, the Financial Reporting Council announced on March 8 that […]
How much concern do we feel for Kevin Ellis? He should sit pretty—senior partner of the UK firm of PwC, which in 2021 clocked up record global revenue of $45 billion. The average profit of his UK partners was a league-leading £868,000, and Ellis himself in 2020 took home a handsome £4.4 million. Instead, this week’s press attention […]
As the UK’s audit cops are kicking back and watching KPMGers throw each other under the bus and a former audit partner feign ignorance about documents being forged during a tribunal hearing on the clown show that was the firm’s auditing of Carillion, the Financial Reporting Council decided to give KPMG a small taste of […]
“It is of course for the tribunal to reach a conclusion on the allegations as they relate to the individuals concerned. Nevertheless, it is clear to me that misconduct has occurred and that our regulator was misled. The misconduct that this tribunal will hear about over the coming weeks is disturbing and upsetting for me […]
“If you were the head of audit at one of the Big Four and you read this document, you’d be thinking ‘I think those are the things I’m [already] trying to do.’ The problem, as far as we’re concerned, is they don’t really do it.” — Sir Jon Thompson, chief executive of the Financial Reporting […]
A little over a month after being fined more than £2.3 million by the Financial Reporting Council for that whole Patisserie Valerie mess, Grant Thornton got called to the principal’s office once again for audit failures—this time for its 2015, 2016, and 2017 audits of outsourcing company Interserve, which went into administration in 2019. GT […]
From the Financial Times yesterday: A senior KPMG partner advanced an “untruthful” defence at a disciplinary hearing into the accounting firm’s misconduct in the sale of bedmaker Silentnight to a private equity fund, a tribunal has found. The tribunal also found that KPMG and David Costley-Wood, the partner who led the Silentnight work, had failed […]
Back in August 2018, Grant Thornton UK was given a £4 million fine by the Financial Reporting Council (reduced to £3 million after a settlement discount) for a then-partner’s conflict of interest in serving on the audit committees of two audit clients, in addition to “widespread and serious inadequacies in the control environment in Grant […]
The UK’s audit cops were itchin’ to dole out some discipline today, and the butts that were paddled belong to ex-audit partner Mark Harvey and his former employer EY. The Financial Times reported: Accounting firm EY has been fined £2.2m and issued with a severe reprimand for failings in its audit of Stagecoach, the London-listed […]
When an independent disciplinary tribunal concluded in June that KPMG U.K. and one of the firm’s partners failed to comply with the fundamental principles of objectivity and integrity in their work on the sale of bed manufacturer Silentnight to U.S. private equity firm HIG Capital in 2011, the panel recommended KPMG be fined a record-setting […]
The press release the U.K. Financial Reporting Council sent out earlier today was short and sweet—all of 64 words—but it likely sent a shiver down the spines of TPTB at PwC: The Financial Reporting Council (“FRC”) has commenced an investigation into PwC LLP in relation to its audit of the consolidated financial statements of Wyelands […]
Here’s some less-than-stellar news about the Queen’s KPMG from today’s Financial Times: KPMG faces a record fine of more than £15m after advising bed manufacturer Silentnight on the sale of its business despite the accountant’s “conflict of interest” with the buyout fund that bought it. An independent tribunal found that KPMG and one of its […]
“The fact that I am [sitting] here being accused of dishonesty, and have never been dishonest in my business life … is frankly outrageous. This whole case here is just a witch hunt and if [the FRC] can’t win the case, which they shouldn’t based on the facts, then it is simply a process of […]
Did you know there is a giant wheel with the names of the six largest accounting firms in Britain—PwC, Deloitte, EY, KPMG, BDO, and Grant Thornton—in a hidden room at the Financial Reporting Council’s office? When the mood strikes them, FRC employees will gather round the big wheel and place bets as the wheel is […]
From Reuters today: Britain’s accounting regulator said it has delivered its initial report into KPMG’s audit of builder Carillion, an indication that apparent rule breaches have been found. The construction company’s collapse in 2018 angered lawmakers who called on the Competition and Markets Authority to consider breaking up top accountants to increase competition and auditing […]
PwC is no longer the answer to the trivia question: “Which Big 4 firm in the U.K. received the largest fine from the Financial Reporting Council?” That distinction now belongs to Deloitte. The Queen’s Deloitte was fined £15 million by the U.K.’s audit cops, as well as ordered to pay an additional £5.6 million to […]
Of the six U.K. firms whose 2019-20 Financial Reporting Council audit quality inspection reports we’ve reviewed over the past couple weeks, none of them got at least 80% of their audits done right. If these were high school test scores, Deloitte would get a C+, PwC a D+, EY a C-, KPMG a D-, BDO […]
Welp, Grant Thornton’s 2019-20 audit quality inspection report from the Financial Reporting Council shows that GT hasn’t really gotten much better at audit quality in the past year. That’s kind of a problem when you’re the sixth-biggest accounting firm in the U.K. Last year the FRC was pretty unhappy with Grant Thornton after the firm’s […]
Next up in our review of the most recent Financial Reporting Council audit quality inspection reports are the top midtier accounting firms, or as the U.K. calls them, the “challenger firms” to the Big 4. Let’s start with the firm that’s closest to the Big 4 in terms of revenue—BDO. Bravo Delta Oscar recently got […]
Last but not least, we conclude our review of the Big 4 firms’ 2019-20 audit quality inspection reports from the U.K.’s Financial Reporting Council with the Shemp Howard of the group—KPMG. KPMG made headlines (not in a good way, natch) in June 2018 when the FRC said the firm’s five-year decline in audit quality was […]
Next up in the parade of 2019-20 Financial Reporting Council audit quality inspection reports is the black and yellow float of EY U.K. In the most recent inspection cycle, EY had a smaller audit sample size than Deloitte, PwC, and KPMG, and that was probably a good thing. The FRC noted in its EY report: […]
Congrats to BDO for getting its first-ever fine from the U.K.’s Financial Reporting Council for committing an auditing boner. Now BDO can say it finally has something in common with the Big 4. The Financial Times reported today: Accountancy firm BDO has received its first UK audit fine from the industry’s regulator for rule breaches […]
Yesterday we began our review of the seven audit quality inspection reports issued recently by the U.K.’s audit cops, the Financial Reporting Council, with Deloitte, which was found to have only four of 17 audits (23.5%) that weren’t up to snuff. Today’s victim is PwC. Let’s see how this stalwart of auditing did during the […]
A couple weeks ago the Financial Reporting Council in the U.K. released the results of its latest inspections of the Big 4 firms plus Grant Thornton, BDO, and Mazars, and it was the same ol’ story: audit quality is still really bad. How bad? Like one-third of the 88 audits reviewed during the 2019-20 inspection […]
In hockey if you get penalized for misconduct, you spend the next 10 minutes in the penalty box and feel shame. In auditing if you get penalized for misconduct, you pay some slap-on-the-wrist fine from a regulator, vow to be better next time, and go on your merry way. The Queen’s Grant Thornton is the […]
The U.K.’s audit cops are curious as to why Eddie Stobart Logistics’ 2018 profits were overstated by £2 million, which resulted in shares of the company being suspended last August, a delay in publishing its 2019 interim results, and Eddie Stobart nearly going out of business. So the Financial Reporting Council is now breathing down […]
I remember being deathly afraid of getting into trouble in elementary school because if you were called to the principal’s office, chances are you would get a swat or two on the buttocks from his spanking paddle. Well the U.K.’s Financial Reporting Council has taken its paddle out of the drawer, put it on the […]
I don’t know about you guys but in this weird and depressing time we’re living in, I take a little bit of comfort in finding some shred of pre-coronavirus normalcy in my day-to-day life. And I found something this morning, thanks to Reuters: KPMG U.K. was fined by the Financial Reporting Council for piss-poor auditing. […]
So say the folks at the Financial Reporting Council in the U.K., which fined Grant Thornton £650,000 earlier today for crapping up the audit of a publicly listed company in 2016. The name of the company wasn’t released by the FRC, which is bogus, and neither was the name of the engagement partner at GT […]
Wait, the Big 4 dominates auditor market share across the pond? I’m shocked: EY, KPMG, PwC, and Deloitte — collectively known as the ‘big four’ — audited 81.8% of all UK-listed businesses in 2018, according to figures from the Financial Reporting Council (FRC). Market share was up from 80% in 2017. The ‘big four’ also […]
Ross Howard has joined fellow Deloitte partner Helen George as having received a “severe” slap on the wrist from the U.K.’s Financial Reporting Council for his role in the shoddy auditing of Serco Geografix Ltd., a subsidiary of outsourcing firm Serco Group PLC. Reuters reported: Britain’s accounting regulator said on Tuesday it had fined Deloitte’s […]
While I was vacationing in South Carolina last week, word officially came down from across the pond about the highly anticipated fine KPMG U.K. would be receiving from a Financial Reporting Council disciplinary tribunal for bungling reports on Bank of New York Mellon Corp. The tribunal let KPMG off the hook, deciding on a fine […]
It was Deloitte’s turn on the Financial Reporting Council’s dunk tank today, as the U.K. regulator fined the firm and one of its partners over the audits of the 2011 and 2012 financial statements of Serco Geografix Ltd., a subsidiary of outsourcing firm Serco Group PLC, which were found to be complete rubbish. The FRC […]
Oh look, a Big 4 firm other than KPMG got in trouble earlier today with the audit overseer across the pond. The Wall Street Journal reported: The Financial Reporting Council, Britain’s regulator for accounting and audit, on Thursday penalized PwC and partners Jaskamal Sarai and Arif Ahmad in relation to audits of the 2015 and […]
Here we go again … A U.K. regulator on Wednesday fined KPMG LLP and a partner at the firm after they admitted to misconduct in relation to the audit of financial statements of Co-operative Bank PLC. The Financial Reporting Council, Britain’s watchdog for accounting and audit, handed KPMG a fine of £5 million ($6.51 million) […]
On this week’s episode of “KPMG Did Something Bad” … A U.K. regulator on Tuesday fined KPMG LLP and three executives after an investigation that found misconduct in relation to the audit of financial statements of a Lloyd’s of London insurance syndicate. The Financial Reporting Council, Britain’s watchdog for accounting and audit, fined KPMG £6 […]
From the Wall Street Journal: The U.K. watchdog for accounting and audit on Tuesday launched an independent review into the governance, controls and culture at KPMG LLP’s U.K. audit unit. The Financial Reporting Council will examine KPMG’s risk management, its controls and the behavior of partners and other employees in the audit practice. This first-of-its-kind […]
So, Sky News broke some pretty big news in the United Kingdom earlier this morning regarding the House of Klynveld: KPMG is to cease undertaking non-audit work for the FTSE-350 companies whose accounts it supervises, becoming the first of the ‘big four’ firms to make such a pledge in the aftermath of scandals surrounding the […]
The Investment Management Association (UK) recently held its inaugural Auditor Reporting awards and you'll be happy to hear three of the Big 4 were recognized for excellence in audit (I know you want to make a radio station joke here but read on and you KPMG haters will be disappointed): The awards were set out […]
The Financial Reporting Council of the UK has released the annual results of its inspection of the Big 4 accounting firms. Its verdict? They can do better.
Each of the Big Four – KPMG, PwC, Deloitte and Ernst & Young – were found to have been less than perfect. Each firm had its own specific offenses, but the common thread running through the report was that auditors faced too much internal pressure to do non-audit work, so that the quality and independence of the audits were in danger of slipping.
Ernst & Young was rapped for linking its auditors’ pay and promotion to their non-audit work. Deloitte and PwC were both castigated for sending employees to advise companies both firms were auditing.
The inspector said that audit firms should take more “sufficient professional skepticism in relation to key audit judgments.” In other words, the firms should not take the CFO’s word at face value. In particular, this skepticism should be applied to forecasts, impairment tests, revenue and the confirmation of claimed assets.
The regulators are in a difficult position. There has never been more demand for the services of the Big 4. This week, Deloitte CEO Jim Quigley said that his firm was planning on hiring 80,000 new staff globally over the next five years, taking its total roster to 250,000.
Despite being blamed for going easy on companies and banks before the crisis, companies and regulators have no option but to rely totally on their services.
This stranglehold on business looks set to continue, with more work coming from the non-auditing side. Deloitte also released results this week that showed auditing revenues had slid 1% this year over last year. But its work in the public sector had grown by 38 percent.