Two of the UK’s largest audit firms are still producing work of an ‘unacceptable’ standard, the accounting watchdog has said.
BDO and Mazars, which sit a rung down from the Big Four firms – Deloitte, EY, KPMG and PwC – have been ordered by the Financial Reporting Council (FRC) to improve their audits.
Both did work that required ‘more than limited improvements’, the watchdog said – a blow to BDO and Mazars, who see themselves as challengers to the industry titans.
‘Unacceptable’: Accountants BDO and Mazars, which sit a rung down from the Big Four firms Deloitte, EY, KPMG and PwC, have been ordered to improve their audits
It is the second year in a row in which they have scored worst on audit quality. Just 58 per cent of BDO’s audits passed the FRC’s ‘sniff test’, and half of Mazars’.
But it was the first time in several years where no Big Four auditor was slapped on the wrist.
After being singled out last year, KPMG was told it had ‘significantly improved’. FRC chief executive Sir Jon Thompson said: ‘While it is encouraging to see some improvement in audit quality at the largest audit firms, consistent, long-term improvement is still required.’
The FRC has been pushing auditors to buck up, following high-profile corporate collapses such as Carillion and Patisserie Valerie.
Auditors are supposed to check a company’s financial statements to assure shareholders, staff and suppliers that nothing looks awry.
But they have been criticised for doing shoddy work, failing to grill company directors sufficiently or challenge what bosses tell them.
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