The Big Four accounting firms have come under increased fire from within the United Kingdom’s legal community in recent weeks. The UK sector’s watchdogs said that 30 percent of audits it examined did not meet acceptable standards. Of the Big Four firms, KPMG received the most criticism for its work on banking audits.
The list of problematic work conducted by KPMG, Deloitte, EY, and PwC is extensive, according to UK watchdogs. KPMG is facing a multi-million pound fine for its handling of a sale of a bed manufacturer to H.I.G. Capital, PwC is on trial by administrators of a racing car dealership JD Classics for failing to spot fraud that resulted in 41 million pounds of losses, and Deloitte was fined 15 million pounds last year for its audit of Autonomy Corporation Plc.
EY is also under pressure in the UK for its prior work regarding Wirecard AG in Germany and separately for its work for NMC Health. In the United States, the firm has been sued for allegedly covering a six-year fraud from NMC Health investors.
“There should be more, given the regularity with which the regulator tells us that the auditors are delivering, what I call, bad products,” Prem Sikka, an accounting professor at Sheffield University, said to Bloomberg. “All kind of protections are built into auditors which makes it hard to sue them.”
Spokespersons from EY and PwC have publicly stated the allegations are without merit. Deloitte has not put forth a statement.
“We support the broad direction of these reforms and are pleased to see a recognition of the importance of audit alongside the need to strengthen the wider corporate reporting system,” said Michelle Hinchliffe, the UK chair of audit at KPMG.
The Financial Reporting Council (FRC), an independent regulator in the UK and Ireland, has turned their eye to reforms. While the FRC believes KPMG has been the most lackluster firm out of the Big Four, there have been issues with all firms across the UK. 