The Financial Reporting Council criticised the deteriorating audit quality of the UK’s top audit companies including KPMG, Deloitte, PwC and EY. These global audit firms, collectively called the Big Four, are not longer big on maintaining the standards of the authentic audit.
As per the 2019 report released by Audit Quality Inspections, one fourth of the audits undertaken by these firms had major issues which cannot be overlooked. As per the report, 25% of audits inspected were marked as ‘below standard’, and six audits required ‘significant improvements’, for they didn’t meet even the basic standard.
The global accountancy watchdog also criticised the four for rising in the number of high profile audit failures as compared to last year. The FRC inspection team raised the issue after a series of high-profile financial frauds came to light, which went unnoticed by the Big Four and largest mid-tier audit firms. To name a few – Carillion, BHS and Patisserie Valerie.
Grant Thornton, one of the fifth largest accountancy firm of UK, was questioned recently for the quality of its audit. Only half of its sample audits carried on Patisserie Valerie were ranked as “good” by FRC. The regulator tightened its noose on the pastry chain in January after it discovered a £40 million gap in the company’s accounts. David Dunckley, chief executive of Grant Thornton, defended the company saying that it was not the firm’s job to unveil the fraud.
Earlier this month, Deloitte also got slapped with a penalty of £4.2m for its audit of Serco. Deloitte was fined on the pretext of helping the outsourcing company’s UK subsidiary, Serco Geografix Ltd (SGL) division in covering up its “deliberate fraud” of government tagging contract.