BDO and Mazars face criticism from regulator for “unacceptable” audits

BDO and Mazars have been called out by the UK Accounting Authority for the “unacceptable” quality of their work.

This is followed by spot checks by the Financial Reporting Council on audits by EY, PwC, Deloitte, KPMG – known as the Big Four – and BDO, Mazars and Grant Thornton.

The FRC found that the results of the BDO and Mazars audit inspections “remained of concern”.

Called out: Chartered accountants BDO (pictured) and Mazars have been called out by Britain's accounting regulator for the'unacceptable' quality of their work

Called out: Chartered accountants BDO (pictured) and Mazars have been called out by Britain's accounting regulator for the'unacceptable' quality of their work

Called out: Chartered accountants BDO (pictured) and Mazars have been called out by Britain’s accounting regulator for the ‘unacceptable’ quality of their work

Only half of Mazars’ eight audits were found to be acceptable.

The report also said only seven of the 12 BDO audits inspected by officials were found to be good enough.

BDO said it has made significant investments in resources in its audit practice over the past year, including hiring 350 employees.

It added that embedding these steps took some time.

Mazars said it is very disappointed with the results and is committed to addressing the issues identified and will continue to invest and focus on applying the highest quality standards.

The FRC said in its report today: “The FRC has highlighted concerns at these two companies in the 2021 reports and these companies therefore urgently need to take further action to improve audit quality.”

The FRC said there had been “some improvements” across the accounting sector after a thorough investigation into the failings surrounding the major collapses of companies like Carillion.

Sir John Thompson, chief of the FRC, said his latest report highlighted that “consistent, long-term improvements” were still needed across the industry.

Shifts: The FRC assessment of accounting firms over several years

Shifts: The FRC assessment of accounting firms over several years

Shifts: The FRC assessment of accounting firms over several years

All five audits of mid-tier Grant Thornton were deemed acceptable, but the company was fined £1.3million by the FRC earlier this week for failing to audit Sports Direct.

KPMG, which was rated as particularly underperforming in last year’s report, has “improved significantly”, although the regulator said it will continue to monitor the company’s progress closely.

Overall, 75 percent of audits for all companies inspected by the regulator were good or required limited improvement, up from 71 percent a year ago.

Sir Jon Thompson said: ‘We will closely monitor the potential negative public interest impact that de-risking of companies’ difficult audits could have on audit quality.

‘The FRC will continue to build on our assertive oversight approach to ensure firms consistently deliver high quality audits that over time will result in greater choice and resilience in the marketplace.’

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https://www.soundhealthandlastingwealth.com/business/bdo-and-mazars-criticised-by-regulator-over-unacceptable-audits/ BDO and Mazars face criticism from regulator for “unacceptable” audits

Brian Ashcraft

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