Register to get free articles
Want unlimited access? View Plans
Already have an account? Sign in
KPMG will reportedly scale back its audit operation in a bid to focus on improving standards as the firm has been hit by a series of fines over its audit failings in recent years, according to the Sunday Times.
The news outlet said that the firm has already halted work for some of its clients and would now be “selective” about the work it competes for, according to Cath Burnet, head of UK audit for KPMG.
The announcement comes as more than 70 listed firms put their contracts out to tenders due to compulsory rotation rules.
The decision to scale back its operation comes as KPMG faces a £3.3m fine by the Financial Reporting Council (FRC) over its statutory audit of the consolidated financial statements of Rolls-Royce Group plc for the financial year ended 31 December 2010.
Two weeks ago (12 May), KPMG was also handed a £14.4m fine by the watchdog over its audit of Carillion, after a tribunal found five former staff members deliberately misled inspectors during routine inspections of their work on the now-collapsed construction firm.
The Big Four firm also reportedly notified listed audit clients that the cost of scrutinising their accounts would rise by up to 20% next year, according to Sky News.
The plans from KPMG come as ministers prepare to unveil long-awaited plans to reform audit rules this week, designed to boost standards in the wake of the Carillion scandal.
The audit scale-back comes as regulators try to boost competition in the sector and calls grow for the big four firms to separate their audit operations from consultancy amid criticism of potential conflicts of interest.
Consequently, EY is working to split its audit and advisory businesses into two separate operations worldwide. Last week (May 26), EY said the firm is in the early stages of this evaluation, and no decisions have been made, and the plans envisage an audit-focused firm being separated from the rest of the business.
