Friday , June 2 2023

Deloitte calls for the ban to sell additional services for customer audits after KPMG announces its end


Two of the largest accounting firms in the world have supported a ban on UK auditors selling additional services to their audit clients, identifying a stage for massive changes in the attack industry.

Deloitte and KPMG, two members of the Big Four Professional Services, have backed a promise that could potentially result in tens of millions of income earnings.

Today it was discovered that KPMG plans to put an end to all non-audit work for its FTSE 350 customers after a series of high-level erroneous errors.

Both companies are responding to an industry report by the Competition and Market Authority, which is currently looking for ways to divide the sector. As a ban on companies selling non-audit services, audits were conducted on customers as a possible way to ruin high-end audits – with 97 percent of the FTSE 350 currently under review by Big Four.

read more: The audit industry faces a great storm

Deloitte's response to CMA, written by David Barnes, Global Public Policy Partner, to be dealt with City A.M., the company supported a series of measures to "improve" the industry, which, after the politician's anger, became the collapse of the megaconcracker Carillion.

Mr Barnes called for the introduction of a ceiling on how much a large audit contract can be concluded with a company, a stronger governance structure and a ban on non-audit services, the FTSE 350, and a large company vulnerable to auditing clients.

He also referred to the invitation of Big Four's colleague, EY, for introducing a US-style audit regulatory system with greater responsibility for company executives – saying that "it will determine appropriate responsibility in corporate governance and management to ensure the quality of their financial statements"

He said: "These proposals will be complicated for Deloitte and other market players, but we believe that this set of measures is likely to focus on concerns about choice and change, long-term sustainability and incentives," adding that the company "Strongly oppose any attempt directly split the big four ".

The rules currently allow companies to earn another 70 percent of the audit fee by providing non-audit fees to the FTSE 350, but after the collapse of the Carillion, 14 firms face tightening of the rules by using a snake probe.

KPMG said that today it will stop delivering all non-audit-related services to the 91 FTSE 350 clients whose accounts are audited.

read more: Here are five (yes, five) audit sectors

Bill Mickels, UK President, opened a statement about the company's affiliates City A.M., saying that this is a step "to eliminate even the perception of a possible conflict."

The resulting payments offer a revolutionary, profitable position, but critics say it jeopardizes their independence, claiming companies do not want to risk losing extra revenue from an audit client by telling them things they do not want to hear.

Barnes said: "We recognize that there are still concerns about the independence of the auditor in the United Kingdom. These concerns are not usually found anywhere else in the world, but, given the UK environment, we support the ban for all non-audit firms for FTSE 350 companies and large public interest group for private companies, which it verifies. "

Recent data on FTSE 350 customers shows that KPMG has obtained an audit fee of 198 million pounds, as well as 79 million euro for non audit related services, such as consulting, system integration or tax planning services, while Deloitte received an audit fee of £ 171 million and 103 pounds non-audit fees.

Both companies declined to comment.

The Financial Reporting Board (FRC) KPMG has been selected as regulatory criticism, which has ruined it for several failures and claimed that it carries out a qualitative unacceptable deterioration in its audit.

It acted as external auditors of the failed Carillion, which fell in January with debts of around $ 5 billion, and this year, after investigating its work, HBOS, Quindell and Ted Baker received a fine of more than £ 5 million.

read more: Mazars says that the overall audit and market constraints are solutions to the challenges of the audit industry

Michael announced to its partners in a memorandum reported by Sky News that KPMG believes that the changes would be "most effective if implemented in accordance with the legal framework for all FTSE 350 companies," which suggests that this practice is prohibited wider.

He argued that the big four wholesale divisions should be avoided. "Multidisciplinary companies are the only realistic model capable of carrying out complex, multi-faceted global audits," writes Michael.

The FRC, faced with its own review, led by the chairman and chairman of the board, Sir John Kinsman, independently assesses whether it could take "further steps" to address the threat to the independence of auditors, including a possible ban on advising auditors.

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