KPMG's banking audits not up to scratch, says UK watchdog (updated)

Carillion

23/07/2021 07:56

(Adds KPMG comment, detail)
    By Huw Jones
    LONDON, July 23 (Reuters) - KPMG's audits of banks needed
improvements for the third year running and the accounting firm
will be closely monitored, Britain's auditing watchdog said on
Friday in its annual check of leading accountants.
    Checks of 103 audits undertaken by KPMG, PwC, Deloitte, EY,
Mazars and BDO for 2020/2021 showed that nearly one third of
audits still require improvement, only marginally better than in
the prior year, the Finiancial Reporting Council said.
    The results pile more pressure on the government to propose
legislation to implement changes to corporate governance and the
audit market, as recommended in three government-backed reviews
following the collapse of retailer BHS and builder Carillion.   
    "Inspection results at KPMG did not improve and it is
unacceptable that, for the third year running, the FRC found
improvements were required to KPMG’s audits of banks and similar
entities," the FRC said in a statement.
    "KPMG has agreed additional improvement activities to be
delivered this year over and above its existing audit quality
improvement plan."
    Cath Burnet, Head of Audit at KPMG UK, said the company was
committed to delivering high quality audits and already working
hard to make the necessary changes the FRC has highlighted.
    "Whilst we know we have more to do to improve the inspection
outcomes, our banking audits are robust and the findings do not
call into question our audit opinions," Burnet said. "We are
confident that the steps we have taken to date will result in
improvements in future banking audit inspections." 
    The FRC said improvement measures were also expected at
accountants BDO and Mazars.
    Mazars said it was disappointed with the findings in this
year's FRC report and it was addressing the issues identified.
    "We are fully supportive of the FRC’s efforts in holding our
sector to account, and in demanding improvements in the quality
of audit work," said David Herbinet, Mazar's head of audit.
    BDO had no immediate comment.
    

 (Reporting by Huw Jones; editing by Dhara Ranasinghe and Tomasz
Janowski)
 ((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters
Messaging: huw.jones.thomsonreuters.com@reuters.net))